The Securities and Exchange Commission has launched a probe into possible market timing related violations by The Netherlands two insurance and financial services giants ING Group and Aegon.
According to news reports from Reuters and Dow Jones Newswires, the two companies have been asked to supply information for the SEC’s ongoing investigation into market timing and late trading of mutual funds, including underlying variable life and annuity products, by financial services firms operating in the U.S.
Both companies acknowledged that they had received the requests and indicated that they were fully cooperating with investigators.
“Late trading involves illegal after-market trading at the current day’s price,” said Reuters report. “Market timing, which is legal but widely discouraged by mutual-fund firms, is the rapid dashing in and out of portfolios to take advantage of pricing inefficiencies.” The practice harms investors as the transaction costs involved tend over the long term to lower the overall returns on their investment.
The market timing and late trading scandal has caused turmoil in the U.S. fund industry since last September when investigations, launched by New York’s Attorney General Eliot Spitzer, first revealed the extent of the practice. A number of U.S. and foreign companies have been put under suspicion.
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