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This page was last updated on November 10, 2000. Articles by Fund Democracy: Archives SEC Prepares to Battle Portfolio Pumping and Window Dressing, TheStreet.com (Aug. 16, 2000). Abstract: In the wake of a Canadian settlement of a major portfolio fraud case, the U.S. Securities and Exchange Commission appears poised to send a message to fund managers who manipulate their funds' portfolios to mislead investors. In July, the Royal Bank of Canada's investment management arm paid C$3 million to the Ontario Securities Commission to settle charges that it engaged in portfolio pumping, which occurs when managers buy stocks that their funds already own, thereby driving up the price, to give the fund a one-day boost at the end of a quarter. The SEC seems to be laying the groundwork for its own portfolio pumping case, as it recently created a task force to review funds' trading records for proof that managers are manipulating their portfolios. The task force also is looking for evidence of window dressing, which occurs when fund managers buy and sell securities around public disclosure dates to hide their mistakes or to exaggerate their investing acumen. (View the full text of this article.) |