USPS Offers Solution to Validate Mutual Fund Trades

Cleaning up the mutual fund industry is going to take more than good intentions on the part of traders. The U.S. Postal Service is suggesting the $7 trillion mutual fund industry make use of technology that would stamp the date and time on electronic transactions, making it impossible to sneak in a late trade.

The mutual fund sector has been beset by scandal as it came to light that fund mangers were allowing some preferred trades to go through after the 4 p.m. close of trading for the day.

The USPS is suggesting that electronic postmarking technology could solve the problem by stamping the date and time on a document so it can be verified that the trade was made before the 4 p.m. deadline. The USPS claims the technology includes the capability to tell if anyone has tried to tamper with the trade, the Boston Globe reported.

The agency has the power of federal law behind it since it is a crime to tamper with postage documents.

"We're a disinterested third party," Chuck Chamberlain, who runs the electronic postmark project for the USPS, told the Globe. "There's nobody to bribe in this system. No single person has access to the system whereby they could manufacture a transaction or alter one without being detected."

The Postal Service and its corporate partner AuthentiDate Inc. of New York, are among several companies offering solutions to help prevent future fraud in the mutual fund industry. Fidelity Investment is backing a system it says could do the same thing the USPS system does, only much cheaper, the Globe reported.

Regardless of what firm ends up providing the service, industry insiders concede that the technology is needed to combat human corruption. "I truly believe this industry can use technology to solve this problem," Chip Voneiff, who runs the investment management practice at PricewaterhouseCoopers, told the Globe.

"If you take away the human element" from processing trades, "it becomes much more difficult to do something inappropriate," he said. "You're never going to get rid of bad apples, but you can make it a heck of a lot harder for them to get away with it."

You may like these other stories...

Your 15-year-old may be tech-savvy enough to debug your computer, back-up data on your mobile devices, and help you stream episodes of Game of Thrones, but chances are you can’t expect them to display the same level of...
The Public Company Accounting Oversight Board (PCAOB) and the Danish Business Authority (DBA) entered into a cooperative arrangement on July 18 that gives both regulators oversight of audit firms in their respective...
Liberal groups object to bill barring taxes on Internet accessThe Internet Tax Freedom Act hasn’t been a controversial bill. In fact, it’s so popular that senators are seeking to pair it up with a far more...

Upcoming CPE Webinars

Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.