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SEC Names New Head of Midwest Office

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CHICAGO (–Merri Jo Gillette, who helped lead the Securities and Exchange Commission’s lawsuit against Pilgrim Baxter & Associates Ltd. for market timing of PBGH mutual funds, has been named regional director of the SEC’s Midwest Regional Office.

Ms. Gillette most recently was associate district administrator for enforcement in the SEC’s Philadelphia District Office. She succeeds Mary Keefe, who in November left her job as head of the Midwest Regional Office to take a position as associate general counsel and head of global compliance for Citadel Investment Group LLC, a US$9.5 billion hedge fund firm.

News of Ms. Keefe’s departure came out at about the same time that the SEC announced its Philadelphia District Office was pursuing civil litigation against Gary L. Pilgrim, Harold J. Baxter and their eponymous mutual fund investment advisory firm. That lawsuit, and one filed Nov. 20 by New York Attorney General Eliot Spitzer, charged that the two men were investors in a hedge fund, Appalachian Trails LP, and that they gave that fund special permission to conduct market timing of the PBGH Growth Fund mutual fund and also allowed it to trade other Pilgrim Baxter funds.

In response to those charges, PBGH Funds instituted a number of changes designed to strengthen its anti-market timing provisions, among them a 2% redemption fee on shares sold within 10 days of their purchase.

Other cases Ms. Gillette oversaw or participated in included litigation alleging financial fraud at a not-for-profit health care system in Pennsylvania; enforcement actions against firms that participated in undisclosed revenue sharing arrangements connected to sales and distribution of mutual funds; and cracking down on broker-dealers who sold class B mutual fund shares without disclosing that they were subject to higher annual fees than other share classes.

“Merri Jo is a lawyer of considerable talent who has played a large role in many of the successful cases brought by the Philadelphia District Office over the past several years,” said Steve Cutler, the Commission’s director of enforcement. “She will bring an enormous amount of energy, tenacity and passion to her new role as the leader of our Midwest Regional Office.”

The move will be a homecoming of sorts for Ms. Gillette, who received her Bachelor’s degree from Northwestern University in Evanston, Ill., in 1979.

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Contact Robert F. Keane with questions or comments at:

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