Time to run away from Amerindo. That's the only logical decision in any case where the mere charges of wrongdoing guarantee that the fund...

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Time to run away from Amerindo.

That’s the only logical decision in any case where the mere charges of wrongdoing guarantee that the fund you own will be forever changed. Amerindo Investment Advisors was a high-flying boutique investment firm that made its name during the bull market. It was not just the 250 percent gain of the Amerindo Technology fund in 1999 that drew headlines, but the philanthropic bent of manager Alberto Vilar and the horse-racing panache of co-manager Gary Tanaka that created an aura investors liked.

That aura pretty much turned to mud during the bear market, when the firm saw its flagship technology fund fall into a three-year tailspin that more than swallowed the gains of the 1998-99 boom times. The firm’s mutual-fund assets, which peaked at around $700 million in March of 2000 are now down to just under $100 million.

Vilar and Tanaka were recently charged in two separate complaints of fraud and went to jail. Federal prosecutors allege that Vilar looted a private investment account to fulfill some of his charitable pledges — but also to pay some personal business expenses — and that Tanaka used investor funds to buy five racehorses.

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It is crucial to recognize that the alleged thievery did not occur in mutual-fund accounts but rather in separate accounts run by the firm. Investors should not worry that their managers might be looting their account; fund assets are held by custodians, and managers could not access the cash the way Vilar and Tanaka purportedly did with the private accounts. But the fact that the bad actions do not directly affect the funds does nothing to lessen the effect on Amerindo shareholders.

When a firm like Putnam or Janus was implicated in the wrongdoing of the scandals, investors in specific funds frequently were unaffected. Top brass might have been in trouble, but the fund itself did not change. For Amerindo Technology, anyone who has stuck out the last few lousy years has stuck around because they wanted the guidance of Vilar and Tanaka.

Amerindo Technology’s independent directors did a strip-search of their own once Vilar and Tanaka were arrested: They stripped the duo of all responsibilities with the funds and started searching for new management to take over.

The Securities and Exchange Commission jumped into the act by asking a federal judge to appoint a receiver to take control of Amerindo Investment Advisors, noting that Vilar and Tanaka were the only ones at the firm with full decision-making authority.

Even if Tanaka and Vilar are exonerated and somehow wind up back in charge, the fund would spend months in limbo. The likely outcome for Amerindo Technology is pretty simple: The directors find a new manager — long before Vilar and Tanaka settle or go to trial — in a deal that must be approved by either a receiver or by the insider who winds up in charge at Amerindo.

Amerindo Technology’s assets most likely would end up being rolled into an existing fund run by the new manager.

“You can make a pretty good case that there is no reason to wait around here to see what happens next,” says Gregg Brewer, director of mutual-fund resources for the Value Line Mutual Fund Survey.

“Whatever happens next, this will not be the same fund you bought, so you can say that investors are better off simply changing the fund than waiting to see what happens next.”

Chuck Jaffe is senior columnist at CBS Marketwatch. He can be reached at jaffe@marketwatch.com or Box 70, Cohasset, MA 02025-0070.