The National Association of Securities Dealers Inc. has ordered ING Funds Distributor L.L.C. to pay a $1.5 million fine and $1.4 million in restitution in connection with mutual fund market-timing allegations.[@@]
The NASD, Washington, also has imposed a $25,000 fine and a 30-day supervisory suspension on the distribution firm’s supervisor, William Sessions.
ING Funds and Sessions have consented to the entry of the NASD’s findings without admitting or denying the allegations, according to the NASD.
Market timing is the practice of using rapid trading strategies to profit from uneven flows of price information and other information through world financial products markets.
ING Funds, a U.S. unit of ING Groep N.V., Amsterdam, developed and began enforcing policies for controlling market-timing and frequent trading soon after it acquired Pilgrim Funds in 2000, but the company let 1 client engage in excessive trading until 2001, and it let 2 other clients engage in excessive trading until 2003, the NASD says.
Because ING Funds failed to follow its own rules, it also did a poor job of detecting and stopping excessive trading by other clients, the NASD says.
NASD notes that ING funds failed to keep all electronic mail from the periods in question and was unable to produce all of the e-mails that NASD investigators had requested.