The American Funds group, a subsidiary of Capital Group Cos. is one of the United States' largest stock and ond holders. Seventy-five years into its existance the firm may be facing legal action. Now that new SEC boss Chris Cox has gotten a bit more comfortable in his chair some have surmised that the long brewing government probe into whether American's trades have run afoul of federal "best execution" requirements. And expectations are that if the three year investigations prompts legal action, Cox will quickly find himself in self in a very hot seat. American's alledged transgressions fall within a fairly murky area of securities law. If the SEC chooses to duke it out with the firm and clarify law via an attempted prosecution, things could get ugly.

For a much better primer on the issues in this case than I could possibly provide, take a look at this L.A. Times article.

-- MDT