SANTA MONICA, Calif. (AP) – Wilshire Associates Inc., which operates a major stock index and consults for the country’s largest pension funds, says the Securities and Exchange Commission is examiningshort-term mutual fund trades it made over the past 10 years.

The company said it did not break the law by hedging investments through the use of mutual funds on behalf of clients starting in 1993.

The questions come as the SEC has increased its scrutiny of the mutual fund industry, especially when it comes to short term trading and giving certain large clients, such as hedge funds, preferential treatment.

In one case, New York regulators accused one mutual fund company of allowing a large hedge fund to trade after the market closed.

Wilshire, which is based in Santa Monica, Calif., said in a statement Monday that it never sought or received preferential treatment from mutual fund companies.

Wilshire provides consulting for the California Public Employees’ Retirement System as well as the University of California. It also operates the Wilshire 5000 Total Market Index, which tracks the returns of about 5,700 publicly traded firms with U.S. headquarters, plus several smaller indices.

The company said the strategy involved investing in certain stock index mutual funds while at the same time taking short positions in futures contracts based on the same stock indexes. The strategy was designed to take advantage of discrepancies in the pricing of the futures contracts.

Wilshire said the strategy returned 30 percent in its best year and was discontinued on behalf of its clients by the end of the first quarter of 2002. Wilshire stopped using the strategy for its own accounts earlier this year, the company said.

“This investment strategy was entirely lawful,” the company said in a statement.

Wilshire said it has been cooperating with the SEC and will continue to do so.