Nov. 6, 2003 — Alliance Cap Mgmt Holding L.P. (AC) said it has uncovered instances of improper trading of its mutual funds and may face enforcement action by federal securities regulators in connection with them.
The company said its in-house investigation has “identified a number of market timing transactions,” and believes some of them “had an adverse effect” on fund shareholders. Alliance said it has informed the Securities and Exchange Commission and the New York attorney general of its findings.
Alliance also confirmed recent press reports that last Friday it received a Wells notice from the SEC, telling the company that the agency’s staff plans to recommend enforcement action against Alliance because of the market timing.
Alliance said it hopes to reach a resolution with the SEC and the New York attorney general. The resolution is likely to include sanctions, penalties and restitution to fund shareholders, Alliance said.
The asset management company said it has been investigating short-term trading of mutual fund shares and has formed a committee of independent directors to direct the probe and recommend remedial action.
The investigation also has “raised supervisory issues, which the company is pursuing vigorously,” Alliance said.
Alliance’s internal investigation led it to suspend two employees in late September for what the company described as “conflicts of interest in connection with certain market timing transactions.”