DALBAR Blasts 4:00 PM Cutoff Proposal for Mutual Fund Orders.Business Editors BOSTON--(BUSINESS WIRE)--Dec. 5, 2003 In a paper, entitled The Four O'clock Noun 1. four o'clock - any of several plants of the genus Mirabilis having flowers that open in late afternoon flower - a plant cultivated for its blooms or blossoms genus Mirabilis, Mirabilis - four o'clocks Shuffle, DALBAR, Inc. highlights the critical fallacies of requiring a 4:00 PM cutoff for mutual fund orders. Far from discouraging late trading Late trading Late trading of mutual fund shares occurs when investors placing trades after 4 PM receive the 4 PM price. These late traders can use the information revealed after 4 PM to guide their trades: buying funds when their current value is greater than their 4 PM value and and market timing, the paper argues that the proposed course of action will encourage more insiders to prey on To take prey from; to despoil; to pillage; to rob To seize as prey; to take for food by violence; to seize and devour. - Shak. To wear away gradually; to cause to waste or pine away; as, the trouble preyed upon his mind s>. - Shak. See also: Prey Prey Prey small investors Small investor An individual person investing in small quantities of stock or bonds. This group of investors makes up a minimal fraction of total stock ownership. small investor . The paper also points out the likely effect of the proposed changes and makes the recommendation for continuous pricing of mutual funds. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Louis S. Harvey, DALBAR's president, "This may be one of the worst ideas coming from Washington since the '40 Act. It shoots the wrong people in the foot, without curbing abuse one bit." 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 by e-mailing DALBAR at info@dalbar.com or by calling 617-723-6400. DALBAR, Inc., the nation's leading financial-services market research firm, is committed to raising the standards of excellence in the financial-services industry. With offices in both the US and Canada, DALBAR develops standards for, and provides research, ratings, and rankings of intangible factors to the mutual fund, broker/dealer, discount brokerage A discount brokerage is a business that charges clients significantly lower fees than traditional brokerages, typically offering comparatively fewer services and/or advice. , life insurance, and banking industries. They include investor behavior, customer satisfaction, service quality, communications, Internet services, and financial-professional ratings. |
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