WASHINGTON (HedgeWorld.com)–The Securities and Exchange Commission today filed in federal court civil fraud charges against PIMCO Advisors.
The charges came as no surprise following a February lawsuit filed against the Newport Beach, Calif. company and its parent, Allianz Dresdner Asset Management of America LP, by the New Jersey Attorney General’s office. That lawsuit claimed the company allowed market timing and late trading in mutual funds managed and distributed by PIMCO (see).
SEC officials said that Canary Capital Partners LLC, Secaucus, N.J., conducted 108 round-trip exchanges totaling more than US$4 billion in several PIMCO funds as a result of a special market-timing arrangement. Canary used more than US$60 million in a timing capacity in several mutual funds and invested US$27 million in “sticky” assets into a mutual fund and a hedge fund, according to the SEC complaint.
Earlier this year, PIMCO Chief Investment Officer Bill Gross told investors that the dealings with Canary were unfortunate but didn’t hurt shareholder value (see).
Filed in United States District Court in Manhattan, the suit names as defendants: PIMCO Advisors Fund Management LLC, PEA Capital and PIMCO Distributors LLC. Also named are Stephen J. Treadway, chief executive of the PAFM and PIMCO Distributors, and Kenneth W. Corba, former chief executive of PEA. Both are charged with defrauding investors in connection with the undisclosed market-timing arrangement with Canary.