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Janus Hikes Redemption Fee to Quell Frequent Tradi

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Nov. 18, 2003 — Janus Capital Group (JNS) said it has increased its short-term redemption fee to 2% from 1% as part of a response to investigations into the company’s fund trading activities. The fee will be applied to shares sold within 90 days of purchase in the 14 funds that currently impose such a fee.

In a letter to fund shareholder, Janus’ CEO Mark Whiston said that the firm is also considering adding short-term redemption fees to many other Janus mutual funds.

Whiston said that following an internal review, the “few employees” who practiced frequent trading “had either left Janus prior to the announcement of the New York Attorney General’s allegation, or have resigned and are now no longer with the company.”

Whiston added that none of the current portfolio managers on the affected funds established the frequent trading arrangements in their respective funds; no Janus portfolio manager or senior executive engaged in frequent trading activity in Janus funds through his or her own personal accounts, including retirement accounts; and that Janus has no agreements allowing investors or clients to buy fund shares after market close and obtain that day’s closing price.

As reported in the Wall Street Journal, Richard Garland, a Janus executive who investigators say gave e-mail approval to rapid trading of Janus mutual fund shares, stepped down as head of the fund firm’s international business.

Garland’s e-mails were featured prominently in the complaint filed against hedge fund Canary Capital partners LLP by New York Attorney General Eliot Spitzer on Sept. 3., the Journal said. The complaint alleged that Canary and managing principal Edward Stern had executed rapid trades in and out of several firms’ mutual funds, including some at Janus.