The investigation has implicated eight companies, resulted in subpoenas being issued to several dozen more, and spawned more than 20 lawsuits.
The SEC said on Thursday its staff was preparing to draw up rules to combat trading abuses. Alongside Eliot Spitzer, the SEC is investigating late-trading and market-timing transactions in fund shares. The probe has spread to scores of major mutual fund groups, brokerages, hedge funds and other institutions.
Janus, one of the biggest mutual fund groups in the US, said its net assets fell by 3.6 per cent during September, to $146.5bn at September 30. It said it had a net outflow of $1bn from institutional money-market funds – which often see sizeable swings – and an outflow of $3.4bn from non money-market funds.
The latter is unusually large and appears to show investors have pulled their money from the group after hearing of the investigation, which was announced on September 3. A further $1.1bn in assets was lost during the month through market depreciation, said Janus.
The SEC said on thursday it was “aggressively investigating” market timing, as well as allegations of late trading, where investors, usually hedge funds, illegally bought mutual fund shares after 4pm, but at the 4pm price.
The SEC said “it is clear that there are additional regulatory actions that the Commission should consider in seeking to eliminate or significantly curb late trading and market timing abuses in the future”.