March 5, 2004

RS Investments May Face Market Timing Charges

An excerpt from the March 3, 2004, edition of The Wall Street Journal

RS Investments has joined the parade of mutual fund companies that may face charges related to market timing.

RS said in a government filing that had been notified that the Securities and Exchange Commission and the New York Attorney General may bring civil enforcement actions against the firm and an undisclosed number of officers and employees.

San Francisco-based RS Investments, which oversees 10 mutual funds and has $7.2 billion under management, said the "regulators' concerns relate principally to market timing activities in" RS Investment Trust:Emerging Growth (RSEGX). The firm says it is in "discussions" with regulators.

"In the past, we took steps to remove market timers from a fund if the portfolio manager believed they were detrimental to the fund's performance," the firm wrote in a letter to clients posted on its Web site. "Among other things, as long as the fund's cash flow met the portfolio manager's desired cash management parameters, we did not believe timers were necessarily detrimental to a fund."

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