SEC Adopts Rules to Address Market Timing

WASHINGTON (HedgeWorld.com)–The Securities and Exchange Commission has announced new rule amendments designed to force mutual fund companies to better explain to their investors any fund timing arrangements they have.

The amendments focus mainly on providing more information in mutual fund prospectuses.

They require, for instance, that mutual funds disclose in the prospectus any shareholder risks from the frequent share purchases and redemptions that are the hallmark of market timing.

They also require mutual funds to state in their prospectuses whether the fund board of directors has policies regulating market timing in place and, if not, describe specifically why it feels such policies are not appropriate for the fund.