(MONEY Magazine) – Fund-research firm Morningstar has urged investors to walk away from Alliance Capital, Janus Capital and Nations Funds, as well as other groups tainted by the latest scandals. That's why we were surprised to see Morningstar's soft touch with Putnam, whose insider trading offenses rank among the worst. Although Morningstar advised that investors not put new money into Putnam funds, it stopped short of a full-scale sell call--making Putnam the only major fund family entangled in the mutual fund mess to avoid such a recommendation. (As of Dec. 4, Morningstar had not weighed in on Invesco.)

Morningstar editor Russel Kinnel says the Putnam decision was a close call. In the end, analysts were swayed by the firm's quick moves--chief among them replacing CEO Larry Lasser and hiring former head of SEC enforcement Barry Barbash to strengthen its compliance systems. Other firms responded weakly, he says; for example, the Janus executive named most prominently in the market-timing accusations resigned in November, two months after the allegations became public. Says Kinnel: "The behavior at Putnam was as bad as we've seen, but their reaction was swifter, and the people now in place are better than those who were there before." --LISA GIBBS