(MONEY Magazine) – A new case has raised once again the issue of fund chiefs putting their own interests ahead of their shareholders'. At the end of September, Montgomery Growth Fund portfolio manager Roger Honour, 41, agreed to pay roughly $400,000 to settle a Securities and Exchange Commission probe into his personal stock trades. The SEC alleged that while working at Twentieth Century Investors and Alliance Capital from 1990 through 1992, Honour bought and sold securities for his personal account close to the time he was trading them for the funds and other accounts he managed. The SEC's main worry in such situations is a practice known as front-running, which occurs when a manager buys a stock for himself and then directs the fund to buy it to drive up the price.

Honour, who declined to comment for this article, neither admitted nor denied the allegations. As part of the settlement, however, he agreed not to make any personal trades as long as he is associated with an investment company. Does the SEC action mean you should you sell Montgomery Growth? We don't think so. According to Montgomery Asset Management chairman Stephen Doyle, Honour has not made a single personal trade since launching the fund in September 1993. (Growth, by the way, was MONEY's Fund of the Month for December 1994.)

This case is the latest in a series of apparent conflicts of interest involving top fund managers. In January 1994, John Kaweske, the star manager of Invesco's flagship Industrial Income Fund, was fired for violating Invesco's personal trading policy. In February of this year, the SEC fined John Wallace, then manager of the market-stomping Oppenheimer Main Street Growth & Income Fund, $20,000 for making personal trades without reporting them to Oppenheimer promptly.

Do these cases suggest an epidemic of managers abusing their position? Again, we think the answer is no. For one thing, in all three cases the fund companies alerted the SEC, which suggests that they are being vigilant. Second, no one has suggested that investors have lost even a penny in any of these instances. "There's no evidence that managers' trading has hurt the funds' shareholders," says Sheldon Jacobs of the No-Load Mutual Fund Investor. With all the other things you have to worry about--including funds' high expenses and risky investment strategies--personal trading by managers does not appear to be a threat to your returns.

--Jason Zweig