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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