Late trading is trading that executes after a market has closed while still being charged the share price in effect when the market was open, most often described in the context of mutual funds, where an order placed after the four p.m. close of the New York Stock Exchange nonetheless receives that day's closing price rather than the next day's opening price. The practice is illegal in the United States under Securities and Exchange Commission rules, but investigations found that many mutual fund managers allowed exceptions for favored hedge funds and other investors who received same day pricing despite submitting orders after hours. The scheme was central to the 2003 mutual fund trading scandal in the United States.
Facts
Elements of OffenseTrading that executes after the market closes while charging the share price of when the market was still open 1 Notable ExampleMutual fund managers who allowed exceptions for certain hedge funds and other favored investors to obtain the earlier day's price on after-hours orders 1 Jurisdiction VariationUnited States: the practice is illegal under SEC rules 1 Partially Attested
Classification CodeUnited States: SEC rule 17 CFR 270.22c-1, Pricing of redeemable securities for distribution, redemption and repurchase 2 Wikipedia says late trading is illegal under SEC rules without naming a rule; 17 CFR 270.22c-1 is the pricing rule whose text requires sales at the net asset value next computed after receipt of an order, so the link to the offence is inferred Classification
Offense GradeSerious or Indictable Offense 1 Connections
Has Offense Grade
Entity-backed identity for the offense-grade enum value this offense already carries, resolved to a crime concept by an explicit value-to-entity map (phase 3 bucket conversion, docs\design_entity_backed_browse_buckets_20260928.md). The offense-grade fact itself stays on the offense unchanged.
In the Other Atlases
Sources
1. Late trading, Wikipedia
Introduction, definition
Late trading is trading that executes after the market closes, while charging the share price of when the market was still open.
Controversy, legality
In the United States this practice is illegal under SEC rules
Controversy, mutual fund managers
many mutual fund managers appear to have allowed exceptions for certain hedge funds and other favored investors who were able
View the Source2. 17 CFR 270.22c-1, Pricing of redeemable securities, Cornell Legal Information Institute
Paragraph (a)Quote, Paragraph (a)
except at a price based on the current net asset value of such security which is next computed after receipt of a tender of such security
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