By James Langton

(November 29 – 17:50 ET) – The recent RT Capital scandal has the Securities and Exchange Commission looking for evidence of juicing among U.S. fund managers, according to a report from the Investment News.

The paper says that the SEC is investigating whether some mutual funds use improper techniques to boost portfolio performance at the end of a reporting period.

The SEC has reportedly requested trading records from a number of firms, similar to a cross-country sweep that hit Canadian managers in the wake of the RT scandal. The Canadian follow-up investigation has yet to result in additional cases of juicing.

Gene Gohlke, associate director of the SEC’s Office of Compliance, Inspections and Examinations, is quoted as saying, “We’re conducting inspections to determine if mutual funds or their investment advisors engage in that type of activity.”

Richard Walker, SEC’s head of enforcement, is quoted referring to the RT case in a follow up story by Bloomberg. “Let me be clear — I view this as an antifraud violation,” Walker said. “Investors are misled if they are told that the fund is investing consistent with prospectus disclosure when it is not.”

Investment News says that a study issued in late October by the Wharton School at the University of Pennsylvania, the University of Texas in Austin and Goldman Sachs Asset Management finds statistical evidence of juicing.

“What you see is that the indices outperform the S&P 500 significantly on the last day of the quarter, and then they underperform on the first day of the next quarter,” says David Musto, assistant professor of finance at Wharton and one of the study’s authors.

“People are marking up their portfolios. They are making purchases in stocks that they already own in the last minutes of the trading day. There’s an increase of trading volume when you are tracking year-ends, quarter-ends, and month-ends, relative to other days. You see that big bump-up in excess trading activity.”

Musto also says the phenomenon is more pronounced for the top-performing funds.