It's always ugly to watch parents fight with their children, especially when the fight gets into court, and Thursday offered a case in point. According to a release, an arbitration panel ordered Waddell & Reed Financial Inc. to pay insurance holding company Torchmark Corporation $7.4 million to resolve a tax dispute. Torchmark owned the Overland Park, Kansas-based mutual fund company until spinning it off in 1998.

The dispute relates to state tax refunds in mid-nineties, and was previously disclosed by Waddell. The beleaguered fund company claimed it had already set aside enough money to cover such an eventuality, an amount almost equal to the price of resolution, and that the difference is negligible. Still, the settlement comes on the heels of a market-timing settlement with Eliot Spitzer, the SEC and the Kansas Securities Commissioner's Office in late July, and a prior settlement with Torch in May 2005 regarding non-tax matters. 

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