DALBAR, the US financial services market research firm, has condemned out of hand the Securities and Exchange Commission (SEC) decision to disallow mutual fund tradng after 4.00 p.m.
“This may be one of the worst ideas coming from Washington since the ’40 Act,” says Louis S. Harvey, DALBAR’s president. “It shoots the wrong people in the foot, without curbing abuse one bit.”
DALBAR today released a paper in response to the SEC’s idea entitled The Four O’Clock Shuffle. It predicts many unintended but costly consequences of the ruling.
The paper argues that, far from discouraging late trading and market timing, the proposed course of action will encourage more insiders to prey on small investors. The paper also points out the likely effect of the proposed changes and makes the recommendation for continuous pricing of mutual funds.
The Four O’clock Shuffle paper forecasts very high costs of implementing the 4:00 PM cutoff as well as a major disruption to mutual fund trading activities affecting tens of thousands of brokerage firms and employers and costing millions of mutual fund shareholders.
The Four O’clock Shuffle is available on by e-mailing DALBAR at info@dalbar.com or by calling 1-617-723-6400.