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Late Trading

   Also found in: Wikipedia 0.02 sec.
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 selling the funds when the reverse is true. Doing so allows them to earn expected abnormal returns at the expense of the fund's long-term shareholders.
Late Trading
An illegal practice in which an investor buys or sells shares in a mutual fund at the previous trading day's price while having knowledge of the next day's net asset value. Mutual funds calculate their net asset values for the next trading day at the close of the previous day; this informs the next day's opening price. An investor commits late trading if, knowing this calculation, he/she buys or sells shares in the mutual fund in such as way as to profit off of the next day's opening price. It differs from after hours trading, which is legal. See also: Insider trading.


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? Mentioned in ? References in periodicals archive
 
Late trading is the banned practice of dealing in shares wheninvestors are locked out of trading after the market closes.
US watchdog sues London hedge boss over trades by The Evening Standard (London, England)
The Securities and Exchange Commission (SEC) has proposed regulations intended to stop late trading and reduce market timing.
Mutual Funds: SEC Should Modify Proposed Regulations to Address Some ... by General Accounting Office Reports & Testimony
Late trading investors receive 'backward pricing', that is, the price calculated at the pricing point that has already passed.
Mutual Fund Scandals In The United States: What is The Impact On Hong ... by Smith, Phillip; Brocklehurst, Kevin / Mondaq Business Briefing
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