Piggybacking, sticky money and riding shotgun in the omnibus: handy hints from the hedge funds handbook

“It is intolerable when investment professionals - who have a duty to serve the best interests of their customers - instead put their own interests first. That way of thinking is antithetical to the responsibilities investment advisers, broker-dealers, and their employees owe to mutual fund investors. Mutual fund investors have a right to expect fair treatment, and when they do not receive it, we at the Commission will demand it on their behalf.”[1]. Helen Parry of London Metropolitan University investigates market timing and late trading on both sides of the Atlantic.

In a recent development in the ongoing saga of late trading and market timing abuses in the US mutual fund industry, New York State Attorney General Eliot Spitzer has just announced a US$100 million settlement with Pilgrim Baxter & Associates (PBA), a US mutual fund unit of a UK firm Old Mutual Plc, to resolve part of a lawsuit concerning market timing transactions in the PBHG family of mutual funds.