Securities and Exchange Commission examiners are reportedly finding instances of fund managers intentionally mispricing junk bond and small-cap stock mutual fund holdings and may soon take action.

Market-timing woes continue to pervade the mutual fund industry, as even smaller shops are getting caught in the act.

A U.S. subsidiary of Dutch financial services firm ING Group indicated in an SEC filing that the NASD has made a preliminary recommendation that an enforcement action be brought against the affiliate and one of its registered agents. ING Insurance Co. of America said that ING Funds Distributor had received a notice from the regulatory agency and it has an opportunity to respond before NASD staff makes a final recommendation. At issue are three arrangements dating back to 1995, 1996 and 1998 in which the administrator to the then-Pilgrim Funds allowed frequent trading. The Pilgrim Funds later became part of the ING Funds. In September, ING said that an internal review of its mutual fund trading operation showed only isolated incidents of impropriety.

From Sarbanes-Oxley reforms to anti-money laundering rules to the USA PATRIOT Act, the rate of regulatory change within the investment management industry has dramatically increased over the last several years. Mutual fund managers now find themselves dividing their time between meeting the requirements of new laws and maintaining their primary focus of managing and growing assets.

Much as we'd like to move along to something else, we're forced by current events to end the year with yet another discussion of compliance jobs. One year ago, we had Eliot Spitzer to thank for moving the noble profession of compliance professional out of the wings and directly onto center stage. Here we go again.

Franklin Templeton Investments filed "false and misleading statements" with the Securities and Exchange Commission by not admitting to wrongdoing in settling its mutual fund case, Massachusetts Secretary of the Commonwealth William Galvin has charged.

The NASD has fined Citigroup Global Markets $250,000 for distributing inappropriate hedge fund sales literature. The penalty marks the agency's heftiest fine for abusive hedge fund sales practices by broker/dealers.

The Securities and Exchange Commission reportedly fears that investment companies may have paid retirement-plan consultants in order to steer business their way. A probe that began last December looking into possible conflicts of interest in the financial-services industry has uncovered troubling evidence of improper payments to the pension planners, according to the SEC.

It's official. In a highly anticipated move, the Securities and Exchange Commission voted 3-2 in favor of requiring hedge fund managers to register as investment advisors with the agency last week.

Larry Lasser: $78 million.

NEW YORK -- Some fund investors have lost that loving feeling.

The Securities and Exchange Commission's ban on funds directing trades to brokers in exchange for shelf space, or directed brokerage, has mutual fund companies scurrying for new ways to compensate distributors.

Who says there is no such thing as a free lunch? While regulators are pushing to clean up the fund industry, some short-term shareholders are continuing to eat away at returns of other investors by driving up costs and benefiting from an inefficient system.

Marsh & McLennan is under the regulatory gun again, and although the new probe is not related to business at its mutual fund unit, Putnam Investments is sure to suffer some fallout, industry experts say.

The Securities and Exchange Commission is investigating FMI Mutual Funds for possible improper trading practices, the company indicated in a regulatory filing. FMI disclosed that the Commission has opened an informal probe into a 2002 security trade by the former employer of an FMI principal. The principal and former employer were not identified, but the manager of the FMI-affiliated Cortina Funds, Cortina Asset Management, is the sub-adviser in question.

Brokerage firm A.G. Edwards announced that the Justice Department is looking into possible improper trades at the company. While the brokerage firm did not go into specifics or indicate whether it has been subpoenaed, it did admit that it could face some regulatory action for "timing transactions."

A.G. Edwards indicated in an SEC filing that it expects its revenue to decline as a result of the ban on directed brokerage by mutual fund companies. The firm did not disclose, however, how much of a decline it expects, although it did say that in combination with other regulations, the changes could have "significant and adverse" effects.

The Securities and Exchange Commission has subpoenaed Gabelli Asset Management for possible improper trading, the company indicated in an SEC filing. Last October, New York Attorney General Eliot Spitzer filed a subpoena against Gabelli, which admitted that one client had market-timing arrangements.

A federal appeals court has denied a request by the U.S. Chamber of Commerce to delay new rules requiring mutual funds to have independent chairmen. The world's largest business group had launched a campaign to postpone more stringent governance measures adopted by the Securities and Exchange Commission this past summer pending the outcome of its lawsuit challenging the move.

The National Association of Securities Dealers has fined Sentinel Financial Services Co. $700,000 and censured it for not doing enough to stop market timing in its funds. The market timing, which took place in three Sentinel Group funds, was partly a result of a shoddy supervisory system, the NASD said.