Abstract
This article addresses the following key points: Late trading and market timing in mutual funds is clearly illegal. Market timing harms mutual fund holders by reducing their profits and raising their costs. Ethical issues raised under AIMR's Standards of Professional Conduct include neglect of fiduciary duty, dishonest conduct, preferential treatment for favored clients, and the use of material nonpublic information. CFA charterholders and AIMR members acting in supervisory capacities must establish reasonable procedures to prevent legal and ethical violations. AIMR urges anyone with knowledge of illegal or unethical practices on the part of CFA charterholders or AIMR members in the mutual fund industry to contact AIMR.
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