SEC Finally Moves to Stop Arbs Who Prey on Foreign Funds

Whether funds like it or not, their "Arbitragers Welcome" signs will be coming down in 2001. At a conference last month, the Securities and Exchange Commission announced a long-overdue move to prevent funds from using the kind of stale pricing methods that arbitragers feed on.

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Arbitrage pricing occurs when funds use out-of-date prices to value their portfolios. This happens most often when a fund's securities trade on foreign exchanges, particularly exchanges in the Far East that can close up to 13 hours before the 4 p.m. ET closing of major U.S. exchanges. ...