Janus permitted 12 of its clients to rapidly trade funds to time the market, according to the results of a Janus internal review released Tuesday. The news caused the company’s stock to rise as much as 7%.

Each employee with knowledge of the trading has been fired, the company announced, and the methods of clients partaking in the rapid trading have been reset back to normal speed.

Janus’ admission of dealings with rapid-fire traders is the first by a fund company since New York Attorney General Eliot Spitzer’s announced his lawsuit against a hedge fund a month ago.

While not illegal, many companies, including Janus, clearly state in their fund prospectuses that any hit-and-run trading practices would be harmful to long-term shareholders’ bottom lines.

Beside Janus, Bank One, Nations Funds and Strong have said shareholders hurt by these practices would be reimbursed if Spitzer’s probe turns anything up. Janus has so far admitted earning management fees totaling $1 million through improper trades.

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