The legal opinions, meanwhile, are said to focus on what some see as a potential loophole in the securities regulation that's supposed to prohibit late trading -- the "price forward rule." These opinions point out that the regulation never states that all orders to buy or sell mutual fund shares must be submitted to the fund company by the 4 p.m. close of the trading day. This omission in the price forward rule may leave the door open for late trading through a broker intermediary, as long as it takes place before a mutual fund company calculates that day's net asset value, or NAV, for the shares of a particular fund. Many mutual funds don't actually calculate the NAVs for their funds until 5:30 p.m. An attorney familiar with this legal thinking said that because few mutual funds are actually priced at 4 p.m., it's debatable whether that's the true deadline for submitting all orders to buy and sell. Indeed, the mutual fund industry itself has acknowledged implicitly that the price forward rule prohibition on late trading may not be as airtight as prosecutors contend. In fact, an agreement the Canary hedge fund had with Kaplan Securities appears to have tried to take advantage of this 90-minute late-trading window. Under the agreement, Canary had to submit a list of mutual fund trades to Kaplan by 2:30 p.m. each day, but Canary had until 4:30 p.m. to either confirm or cancel those trades. Presumably, Canary was able to use the half-hour after the market's close to determine whether any late-breaking news would have an impact on the shares of the funds it wanted to purchase. Bear Stearns, according to a copy of the agreement, was the clearing firm for all those trades. The agreement states: "Kaplan & Co. will function as the broker in regards to arranging, on a best-efforts basis, market-timing agreements with Bear Stearns and/or mutual fund companies." An official for Kaplan said the company believes all its activities did not violate any securities regulations.