The

NASD

jumped into the market-timing scrum Thursday by fining a division of

MetLife

(MET) - Get Report

$1 million for failing to stop improper trading in some of its mutual funds.

The securities industry self-regulatory organization also ordered Boston-based

State Street Research

to cough up $500,000 in restitution to the funds that some investors were permitted to make frequent trades in.

State Street is the latest in a long list of mutual fund companies to be accused by securities regulators of permitting improper trading in shares of its funds.

Market-timing is the term for a legal but frowned-upon trading strategy in which mutual fund shares are bought and sold frequently in order to profit from price differences in different markets. It's harmful for the vast majority of mutual fund investors because it can dilute the value of a fund by driving up trading and administrative costs.

In its investigation, the NASD said it found that State Street officials knew brokers in the Boston office of

Prudential Securities

were actively market-timing shares of it mutual funds, but State Street failed to take adequate steps to stop the brokers.

The NASD complaint didn't identify the Prudential brokers. But Massachusetts regulators and the

Securities and Exchange Commission

previously filed civil fraud charges against several former Prudential brokers, charging them with using deceptive techniques to engage in an aggressive pattern of market-timing.

Prudential Securities is jointly owned by

Wachovia

(WB) - Get Report

and

Prudential Financial

(PRU) - Get Report

.

As originally published, this story contained an error. Please see

Corrections and Clarifications.