NEW YORK (CNN/Money) - Vanguard founder and former chairman John Bogle says market timing and late trading have long plagued the fund industry, and advises people to be smart with their investments.

"The idea that mutual fund firms would organize to formally give somebody a late trade, I must say I find astonishing," said Bogle.

Vanguard founder and former chairman John Bogle talks with Ken and Daria Dolan about the mutual fund industry. Play video (Real or Windows Media)

"Things like the international time zone trading have been going on for at least a decade and it has been documented in financial analyst journals," Bogle said. "Everybody in the industry knew about it. The SEC knew about it and nobody did anything to stop it."

Approximately 95 million people, or 60 percent of all investors, own at least one share in a mutual fund. But industry experts have said that market timing and late trading activities have resulted in relatively small damages to individual investors -- estimates range from less than 1 percent to about 2 percent in returns.

Bogle said that the recent scandals aren't likely to drive any funds out of business. But he tells individuals to look for funds that best serve their investment goals.

His advice to investors includes looking for funds with low overall costs and portfolio turnover, ones with managers who have been around for more than five years, and funds that don't advertise their performance.

Bogle also cautions employees about being locked in by their 401(k) choices. If you are not happy with your choices, he said, then talk to the plan's administrators about switching.

"I would talk to my fellow employees and I'd say let's talk to the administrators and move this whole plan somewhere else," Bogle recommended. "And that is going to happen in this industry."