The Wall Street Journal reports that Prudential Securities received in excess of 25,000 letters from mutual-fund companies in the last year warning that its brokers were engaging in improper mutual fund trading practices. The newspaper says that the Prudential 'did nothing to curtail the problems'.
This is the latest sensational claim to arise out of regulators' probes into US mutual funds trading practices. Five former Prudential brokers and two former Boston branch managers have now been accused of improper trading by regulators following the probes. The Securities and Exchange Commission is also completing its own inquiries and will notify firms later this week if they are to face possible charges.
New York state Attorney General Eliot Spitzer has already confirmed that any firms involved in illegal or improper trading practices will face tough penalties. He said they 'will be big, it will impose pain, and it should'. Spitzer has met with the SEC with a view to co-ordinating their efforts as the probes continue.
In the UK, regulator The Financial Services Authority has confirmed that it may consider tightening market timing trading rules. The regulator is currently taking industry soundings.