Hedge Funds

GAO scolds SEC over handling timing scandals


A report released by the Government Accountability Office says the Securities and Exchange Commission failed to detect "market timing" abuses by hedge funds that led to substantial losses for mom-and-pop mutual fund investors.

The GAO report notes that it was New York Attorney General Eliot Spitzer who exposed violations by market timers in 2003, and that the SEC "did not examine funds for market-timing abuses because agency officials viewed other activities as representing higher risks."

The GAO report pointed a finger of blame at the SEC's Office of Compliance Inspections and Examinations. "The SEC must take a stronger position