Can Janus Save Face?

By Amey Stone

For Janus Capital Group, the Denver-based mutual-fund company, being implicated in New York Attorney General Eliot Spitzer's probe of alleged trading abuses at mutual-fund companies couldn't have come at a worse time. The one-time darling of the growth-stock era was in the incipient phases of a turnaround after suffering catastrophic fund losses and major investor defections during the three-year bear market. Fund returns were perking up, and management was diversifying into new investment styles, cutting debt, and reducing expenses. In recent months, some new assets were starting to trickle in, while the flood of assets out the door was abating. The parent company's stock price had responded smartly to the positive signs, rallying from $10 in March to $19 by mid-July.

The stock's run, and many investors' faith in that turnaround, came to an abrupt halt on Sept. 3, when Spitzer announced his probe. He named Janus (JNS) as one of four major f

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