A subplot to
Regular investors are currently entitled to know the specifics of their mutual funds holdings twice per year, but even then, the information is often long outdated. Mutual fund companies have argued that a switch to more frequent disclosure would reveal too much about the funds strategies, unfairly benefiting quick-moving short-term investors while harming long-term traders.
But with the charges against Bank of America, it has become obvious that Canary Capital, along with being allowed to trade after the market closed, was getting an inside look at the specifics of Bank of Americas portfolio, thus giving it an incalculable but substantial advantage.
"This is a case where, if they are going to do this on a case-by-case basis, then they should do this for everybody,"
Some firms have already begun to disclose fund details as frequently as once a month in the past few years, but often only the portfolios top holdings are revealed. Also, hedge funds, data-tracking companies and large institutional investors have often been allowed to see a portfolios contents provided they sign confidentiality agreements promising that they wont disclose the information they are given. That information, though, is not as current as what Canary allegedly received.
Spitzers complaint contends that to make profit, Canary "first needed to determine the exact portfolio make-up of a target mutual fund. Mutual fund managers were happy to provide this information."
