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Funds Purposely Mispriced Illiquid Assets, SEC Says

Securities and Exchange Commission examiners are reportedly finding instances of fund managers intentionally mispricing junk bond and small-cap stock mutual fund holdings and may soon take action.

These securities are particularly susceptible to manipulation because they are traded infrequently. The whole scenario highlights the need for the Commission to provide further clarity on fair-value pricing, something Paul Roye, the SEC's director of the division of investment management, said is in the works.