This paper evaluates on the SEC’s proposal on several regulations directed to control trading abuses mutual fund. The regulations included strict enforcement in trading hours or the imposition of a 2% redemption fee for solid funds sold in duration sold in less than 90 days.


Imposition of a 2% redemption fee on traders may reduce the figure of profitable trades for the market timers. However, this is not likely to get rid of trading abuses on condition that mutual funds gain from these practices.  The 2% redemption fee can bring extra revenues to funds and also develop a harder trading environment for novice investors who are required to vend their shares for whatsoever basis. According to Riepe better and improved policies would be to get funds for calculation of their total asset values regarding on a fair, continuing current trading price, rather than implementing delayed, undesirable, prices on foreign or delicately traded domestic securities (Maudlin, 2012).

Further, mutual funds would be required to enforce policies that guard against market trading hours.  Most of the mutual funds assure to eliminate the traders who attend to more than two to four round trip market trades each year from any investment in a fund. Conversely, not all of them keep the promise when it comes to leading institutional investors.  The most significant restraint would be to indict those guilty of going against the policies for making false statements and securities fraud.  This is possible given that the prospectus is a SEC legal developed and approved document.  Delayed trading, on the contrary, is also considered illegal and stern enforcement to the existing rules is required rather than developing new regulations (Maudlin, 2012).


I agree that this will curb trading abuses if only they were to be enforced and followed to record to control rogue traders.

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