By JON CHESTO
A major mutual fund industry trade group said yesterday that it set up two task forces to come up with curbs on fund-trading abuses detailed in recent news items.
The Investment Company Institute’s task forces were set up in response to comments earlier this week by Securities and Exchange Commission Chairman William Donaldson, ICI chief Matthew Fink said. Donaldson told a Senate panel that the SEC was mulling new rules to force fund firms to write out trading policies.
The moves follow weeks of headlines generated by regulators in New York and Massachusetts who are pursuing allegations of improper or illegal fund trading.
The trade group’s new panels will target late-trading of funds at prices not available to most investors, and market-timing trades to capitalize on “stale” prices.
“The industry is committed, because it’s so dependent on the public trust, to doing all it can (to address these problems),” Fink said.
Mercer Bullard, a fund industry watchdog, said reforms might help, but better enforcement is what’s really needed.
Recently, several firms have sacked employees for fund trading abuses. Yesterday, Merrill Lynch reportedly fired three New Jersey brokers for enabling late-trading in mutual funds by a hedge fund group, Millennium Partners.
