Mr. Simmons called the situation "unfortunate," but said there wasn't much he could do to discourage trading of the stock in this way.

To discourage trading, a system of quarantine was in force.

Indeed, many of the fund companies sucked into the current scandal had redemption fees to discourage short-term trading.

While such a fee might well discourage short-term trading, it would not help ordinary investors.

The rule was designed to discourage illegal trading on inside information before it was made public to all investors.

Alliance cultivated these relationships despite language in fund documents stating it discouraged such trading, the regulators said.

This should discourage unwanted trading in customers' accounts, a practice known as churning, Merrill officials said.

But tax barriers already exist that discourage excessive trading.

To discourage short-term trading, the fund will levy a 1 percent fee on shares held for less than 90 days.

Many fund companies discourage such trading in their prospectuses and impose fees to prevent it.