The Ontario Securities Commission announced today that its probe into potential late trading and market timing abuses in mutual funds is now moving into its second phase. This more focussed examination of procedures and trading data was outlined in a letter sent on Nov. 5, 2003 to 105 managers of publicly offered retail mutual funds in Ontario.

The OSC says that, so far, the early results of the probe have not uncovered systemic abuses. The fund managers selected for the second survey have been chosen based on the information they provided and also include a random sampling of fund managers.

The OSC adds that it will undertake a statistical analysis of the data collected in the second phase of its probe, beginning in March. Based on conclusions reached through this analysis, the OSC will execute the third and final phase of its planned probe, which, where appropriate, will involve on-site reviews by OSC staff.

The fact that the OSC is now moving to a more focused examination of certain fund managers does not mean that improper trading practices have been uncovered in their funds, the regulator says.

As well, the OSC does not preclude returning later to collect information from fund managers that are not included in this second phase.

The regulator says that it is coordinating its probe with related probes launched by other securities regulators and self-regulatory organizations. While the scope of the OSC’s probe encompasses a number of funds available in Ontario and beyond, several other jurisdictions have initiated complementary probes to examine trading practices in funds.

The Mutual Fund Dealers Association of Canada and the Investment Dealers Association are currently examining information from their respective members. Information collected in all these probes is being shared among regulators.