SEC to Bar Employees From ‘Market Timing’
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The Securities and Exchange Commission said Tuesday that it would bar its 3,400 employees from making short-term trades in mutual funds, a practice at the center of scandals that have rocked the $7.6-trillion industry.
The rule adds a ban on “market timing” to ethics rules governing the financial activities of SEC employees, including the five commissioners.
It requires commissioners and employees to report every mutual fund transaction to the agency.
Since September, at least two dozen fund companies have been sued or are under investigation for abuses such as letting employees and favored customers engage in market-timing trades.
“There’s no indication that there was any problem with SEC staff market timing, but it’s an appearance issue,” said SEC lawyer Michael Clampitt.
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