In the wake of revelations that many mutual funds have not protected fund shareholders from abuse by late traders and market timers, the emphasis of most regulators and pundits has been on strengthening compliance. But although stopping abuses is important, most of the abuses cited are possible only because the standard mutual fund pricing and trading processes are inherently flawed. Most fund share trades that arrive late in the day are costly to existing fund shareholders whether the trades were initiated by short-term traders or by other investors. Investors and regulators need to understand how costly the current trading and pricing processes are and how to fix the problems.