The U.S. Securities and Exchange Commission has brought fraud charges against five former brokers and a former manager for Prudential Securities, Inc.
The six are accused of defrauding dozens of mutual funds by helping some favored customers engage in market timing, a practice that raises costs and dilutes profits for the majority of investors.
The fraud is said to involve thousands of short-term trades over a two year period.
The widening investigation of the $7 trillion mutual fund industry has already led to the firing or suspension of more than 30 officials at money management companies, banks and investment firms.
Regulators say market timing and other alleged abuses across the mutual fund industry have diverted billions of dollars in profits from long-term individual investors.
During a Senate hearing Monday, New York Attorney General Eliot Spitzer said he intends to impose painful fines on wrong-doers in the mutual fund industry and get companies that acted improperly to return money to investors.