The SEC today adopted a rule that will let mutual fund companies impose a redemption fee, on a fund-by-fund basis, on investors that conduct rapid-fire trades. The rule would also enable mutual fund companies to obtain tax identification information from intermediaries about investors that violate market-timing policies and conduct rapid-fire trades. The SEC also asked for additional comments about whether the agency should adopt uniform parameters for a redemption fee.
The SEC also announced today that a report by an independent consultant calculated losses of $4.4 million, including interest, as a result of rapid-fire trades by employees of Putnam Investment Management. Peter Tufano, the senior associate dean at the Harvard Business School, and the independent consultant hired by the SEC also found that Putnam's shareholders lost a total of $48.5 million because of high redemptions after company's involvement in the market-timing scandal became public.