Charles Schwab & Co. today agreed to pay US$350,000 to settle Securities and Exchange Commission claims that it violated SEC rules by allowing orders for mutual funds placed after the market closed to receive that day’s price.

The San Francisco-based brokerage firm settled without admitting or denying the SEC’s claims, which were contained in an administrative action filed today.

The SEC charged that Schwab allowed investment adviser customers to change mutual fund orders after the 16:00 ET market close, creating the risk that such customers could unfairly capitalize on late-breaking news at the expense of other mutual fund investors.

Unlike other mutual-fund trading abuses, the SEC said it found no evidence that Schwab received any reward for allowing the late trades or put in place agreements to permit them. Regulators said Schwab’s senior management wasn’t aware of the practice and put an end to it after it was brought to light by an internal investigation last fall.

According to the SEC, Schwab allowed customers of investment advisers to receive same-day pricing on fund trades, even after the market closed at 16:00 ET, if a prior order for a different fund trade had been rejected that day due to processing problems.

SEC rules require mutual-fund trades made after 16:00 ET to receive the next day’s price. Schwab’s more-liberal approach resulted in hundreds of orders receiving same-day pricing, in violation of those rules, the SEC said. The agency said the practice, begun as early as 2001, also ran counter to Schwab’s stated policy on late trading, which called for orders received after 16:00 ET to be executed at the next day’s price.