Another scandal. What's different about this one?

In one sense, not a lot.

As with the collapse in the savings and loan business back in the 1980s, and the more recent examples such as Enron and WorldCom and the pumping of internet stocks, the heart of the problem is the enrichment of insiders at the expense of other investors.

The problem here is the scale: over 50 million US households invest in mutual funds, paying as much as $70bn a year in management fees alone.

The investments themselves total trillions.

So this touches many, many more people than any previous financial furore.

"I believe this is the worst scandal we've seen in 50 years, and I can't say I saw it coming," said Arthur Levitt, chairman of top market watchdog the Securities and Exchange Commission for eight years under President Bill Clinton.

Why are mutual funds so popular?

Mutual funds have always been touted as the little guy's way into the stock market on the same terms as the big players.

In simple terms, funds simply aggregate investors' money as do many other forms of investment, allowing small and medium-sized investors to punch well above their weight. In the UK such investment vehicles are known as Unit trusts.

That means, inevitably, that the fund managers and their brokers are in a position of trust - and, of course, power.

The SEC chief says he is protecting investors by moving fast

The problem here is that in several ways, some managers and brokers are alleged to have abused that trust.

So how did they do it?

One popular abuse was late trading: allowing favoured clients - the big ones who pay the big commissions - to buy shares held by a fund after the market closes at 4pm and prices have been fixed for the day.

If information breaks overnight that is likely to move share prices, that obviously gives an advantage to anyone who is allowed to respond immediately, rather than having to wait till the following morning.

In effect, the owners of the shares - the investors in the mutual fund - have thus been short-changed.

There has already been some fallout. Some investors in the funds under investigation have pulled out their money - in one case, as much as 8% of the fund's assets have been taken out during a two week period.

Sounds awful. What are the regulators doing about it?

The Securities and Exchange Commission is on the case.

It has threatened hefty fines and agreed settlements with several funds it has investigated.

Putnam Investments, one of the first to be accused, has agreed to institute reforms including an independent board of directors and new controls on what its managers will be allowed to do - although it and the SEC have yet to agree a financial penalty.

And giant investment bank Morgan Stanley has agreed a $50m fine for its managers' behaviour - they were pushing investors to buy those mutual funds that resulted in higher commissions for Morgan Stanley.

Is that enough?

That depends on who you ask.

SEC Chairman William Donaldson - parachuted in last year to replace Harvey Pitt, widely derided as far too close to those he was regulating - says it is, and rejects accusations that he has settled too soon and for too little.

Mr Spitzer: Mutual funds use a 'double standard'

"We have reached a fair and far-reaching settlement that establishes substantial governance reforms and compliance controls that are already benefiting Putnam's investors," he wrote in the Wall Street Journal.

"It is a settlement where the Commission put the interests of investors first. As the Commission continues to initiate critical and immediate reforms of the mutual-fund industry, and while we investigate a multitude of other cases... we will continue to seek reforms that provide immediate relief to harmed investors."

But that does not satisfy the detractors.

Foremost among them is The New York Attorney General Eliot Spitzer, who has made a name for himself prosecuting Wall Street misbehaviour.

It was Mr Spitzer who reached the $1.4bn settlement with banking giants over allegations that they pushed shares in dot.com flotations to favoured clients and released biased research to boost corporate banking commissions.

He says that far from protecting investors, the prompt action risks letting the industry off with barely a slap on the wrist for abuses he believes have been going on for years.

And other critics say that after years of being starved of resources, the SEC remains woefully understaffed and underfunded.