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Abstract
Unlike investments in equities, investors regard mutual
funds as a safe investment option. Investors feel safe
as the investment is indirectly diversified across securities
available in the market. Individual investors also have
an added assurance that the money is being managed professionally
by the fund managers who, supposedly, are experts in
stock picking. One of the factors which affect investor
confidence is the depth of transparency regarding the
investment strategies followed by the fund.
Incidents in the mutual funds industry
during late 2003 have thrown light on some of the malpractices
followed by funds by being partial to some investors
by selectively disclosing critical information and also
by allowing ‘late trading’. This white paper
tries to reveal the concepts like late trading, market
timing and selective disclosure with regards to the
mutual funds industry. This paper also analyzes the
counter actions proposed by Securities Exchange Commission
(SEC) to restrict such malpractices.
Author
Anmol Kamble
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