The SEC is considering taking disciplinary action against firms that fail to follow fair-value guidelines for holdings with outdated prices, Commission officials told The Wall Street Journal.

Even with the fair-value pricing investigation in its infancy and the number of firms being probed not being released, the officials said that fair valuation, the estimation of holdings after prices have become outdated, is a key issue for the SEC since market timers often take advantage of the mispricing that occurs when fair-valuation is not used. The issue is particularly common in foreign stock-laden funds, thanks to the time differences.

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