Investigation and pending class action against Scudder Investments, which is an wholly owned subsidiary of Deutsche Bank. Scutter Investments and Deutsche Bank owns and operates the Scudder family of mutual funds.
This class action lawsuit alleges that Deutsche Bank and Scudder Investments engaged in a pattern and system of "market timing" and/or "late trading" in connection with Deutsche Bank and Scudder Investments operation of the Scudder funds. In the United States, mutual fund prices are set once daily at 4:00 p.m. Eastern time. Late trading occurs when traders are allowed to purchase fund shares after 4:00 p.m. at that day's closing price. Under law, most mutual fund trades received after 4:00 p.m. must be executed at the following day's closing price, but because some orders placed before 4:00 p.m. cannot be executed until after 4:00 p.m., brokers can collude with investors and submit post-4:00 p.m. trades as if they had been placed before 4:00 p.m. Such trades can be made with information about after-hours market developments. Market timing is an investment strategy in which an investor tries to profit from short-term market cycles by trading into and out of market sectors as they heat up and cool off. In many cases, funds bar or limit market timing because the practice may increase the cost of administering a mutual fund borne by all shareholders in the fund.
Market Timing and Late Trading cost the investors in the Scudder funds hundreds of millions of dollars.
Name (Stock Symbol)
Deutsche Bank AG (DB)
Deutsche Bank provides investment banking products and services. It operates in three divisions; Corporate and Investment Bank, Private Clients and Asset Management, and Corporate Investments.
Scudder Investments was purchased by Deutsche Bank and has been folded in to its asset management subsidiary. It manages a family of mutual funds.
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