June 21, 2004 — Pilgrim Baxter & Associates has agreed to a $100 million settlement in a case involving improper trading of its mutual funds, the New York attorney general’s office said Monday.
The company will return $40 million to investors harmed by the trading and pay $50 million in civil penalties under the settlement, which also involves the Securities and Exchange Commission.
Pilgrim Baxter also agreed to reduce the management fees for its PBHG funds by 3.16% over a five-year period, a $10 million reduction. In addition, the firm will cooperate with New York authorities’ investigation of the company’s co-founders, Gary Pilgrim and Harold Baxter.
New York and federal securities regulators last November charged that the firm and Pilgrim and Baxter allowed certain hedge funds to market time their funds, despite policies prohibiting this. Pilgrim and Baxter have resigned from the company.