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The market timing, which took place in three Sentinel Group funds, was partly a result of a shoddy supervisory system, the NASD said. NASD Vice Chairman Mary L. Schapiro, in fact, said that Sentinel "was uniquely situated to enforce prospectus limits and fund policies designed to limit market timing.
"But the absence of effective supervisory systems enabled certain shareholders to engage in impermissible market timing for years," Schapiro said.
The three funds affected were the Sentinel International Equity Fund, which paid $645,631, the Sentinel Bond Fund, which paid $10,098 and the Sentinel High Yield Bond Fund, which paid $3,945.
The NASD said that while its investigation did show that an "excessive trading policy" was adopted in October 2000, "Sentinels inadequate supervisory system enabled some customers of broker/dealers to continue to trade shares of Sentinel mutual funds more frequently than the policy and fund prospectuses, allowed."
