For mutual funds, the market closes at 4pm Eastern Standard Time, and the net asset value does not change until the market opens again. At least, nothing changes officially or legally.
Late-day trading accusations arise when a hedge fund, through a purportedly special relationship with a mutual fund, is said to have bought or sold shares after hours while recording the trade at 4pm., thereby enabling late-day traders to allegedly sell their shares the following morning at a profit once the net asset value has changed. Hedge Fund Fraud charges sometimes accompany allegations of late-day trading.
However, there are exceptions to the prohibition against late-day trading. For example, pension-plan administrators are allowed to forward the day's transactions.
Still, the SEC aggressively pursues any conduct that seems suspicious. Moreover, the FBI has more than 150 agents dedicated to investigating late-day trading and similar Securities Crimes, a 25 percent increase in staffing over the two years prior. Civil and criminal charges are often the result, and in addition to fines and possible jail time, persons found culpable can be barred from working in the industry again.
If you have been accused of late-day trading, Contact one of the Blanch Law Firm's experienced late-day trading attorneys by calling 888-984-5579 . With the Blanch Law Firm on your side, it is never too late.