NASD Fines Sentinel $700K for Market Timing
October 18, 2004
The National Association of Securities Dealers has fined Sentinel Financial Services Co. $700,000 and censured it for not doing enough to stop market timing in its funds. The market timing, which took place in three Sentinel Group funds, was partly a result of a shoddy supervisory system, the NASD said.
NASD Vice Chairman Mary L. Schapiro said Sentinel "was uniquely situated to enforce prospectus limits and fund policies designed to limit market timing, but the absence of effective supervisory systems enabled certain shareholders to engage in impermissible market timing for years."
The NASD said that while its investigation did show that an "excessive trading policy" was adopted in October 2000, "Sentinel's inadequate supervisory system enabled some customers of broker/dealers to continue to trade shares of Sentinel mutual funds more frequently than the policy and fund prospectuses allowed."