SEC staffers are drilling for scandal in Boston, the Boston Herald reports. It says that the Boston SEC office is conducting a mini-sweep of fund firms based in Boston to see if fund executives have been improperly profiting by trading in shares of their products. The article relies mostly on unnamed sources.

The article does not name any specific fund firms as having been contacted by the SEC. Boston is the home of numerous fund firms, including some of the industry's largest.

"It's a sign of the SEC's new `wildcatting' policy," said Derek Meisner on the record source for the paper and an attorney at Kirkpatrick & Lockhart and a former SEC staffer. "They're looking for signs of wrongdoing which might be symptomatic through an industry, but they may not have any evidence at the moment."

The paper explains that the SEC has been contacting fund management firms by letter seeking information on the personal financial dealings of managers and staff. It cites "well-placed sources" as its own source of info.

Apparently, the SEC is seeking evidence of whether fund executives profited from insider dealings at the expense of outside investors by conducting market-timing or front-running trades. Among the documents it seeks those dealing with "short-term purchases, sales, and exchanges of shares" in proprietary funds along with details of managers' outside interests and trading and investment accounts, and fund board minutes and fund firms' risk and controls policies.  

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