Across the Atlantic, IBM Corp is coming under sustained fire from an unexpected source – a mutual fund (unit trust) management company. According to the Wall Street Journal, that plan to sell its own mutual fund group, with $600m funds under management, is under fire from John Bogle, chairman of big mutual fund company Vanguard Group, which wanted to take over the IBM fund. He says the board of trustees of IBM’s funds had a fiduciary duty to turn the group’s management over to the company that would charge the lowest fees to shareholders – and that that company was his own, Valley Forge, Pennsylvania-based Vanguard. Instead, the board agreed, as reported, to sell to the five stock and bond funds for $14m to the highest bidder, a subsidiary of Fleet Financial Group Inc, of Providence, Rhode Island. It was a choice of $14m going straight to IBM or $10m in savings to the fund shareholders over a decade, claims Bogle: Are the shareholders getting a fair shake in these decisions? IBM Credit Corp, which manages the fund arm said Selling the funds is consistent with IBM’s long-term strategy, and Fleet had the best acquisition proposal. The mutual-fund shareholders will find that Fleet has lower costs than a majority of the alternative proposals. The IBM fund group’s 70,000 shareholders are scheduled to vote on the sale to Fleet before a special meeting on June 15. The awkward part of the row is the reason why IBM started offering the funds in the first place: they were launched in 1990 as a benefit to employees, to help them to invest for their retirement. All five are index funds, intended to track the performance of various financial benchmarks, and therefore cheap to run – the fund managers simply buy the index although they may do a bit of hedging if they think the whole market is about to head south. The row is an embarrassment, because it makes it appear that IBM is doing less than its best for enmployees that have suffered unprecedented pain over the past five years, and if Mr Bogle’s accusations stand up, clearly deserve better from the company. Even though it will get profits from the sale, IBM doesn’t even own the funds – they belong to their shareholders, who can vote down the sale.