Aug. 3, 2004 — Evergreen Investment Management Co. said the Securities and Exchange Commission is considering possible enforcement action against the company over improper trading in its mutual funds.
Wachovia Corp (WB), Evergreen’s parent, said it and certain current and former executives also face possible enforcement action by the SEC in connection with stock trades and disclosure issues related to Wachovia’s 2001 merger with First Union. The disclosures by Wachovia and Evergreen were made in regulatory filings on Tuesday.
Evergreen said it was notified of the potential action on July 28. Regulators allege that under an arrangement involving a former Evergreen employee, a broker, on behalf of a client, made trades in a fund that exceeded limitations mandated in the fund’s prospectus, Evergreen said.
The allegations also involve share purchases and sales between September, 2001, and January, 2003, by a former Evergreen portfolio manager in the fund he managed at the time, Evergreen said.
Evergreen and Wachovia said they plan to tell the SEC that it should not initiate the enforcement actions. Wachovia said it believes the stock trades and disclosures related to the First Union merger “complied with applicable law.”
Evergreen also said it has received subpoenas and other requests for information from regulatory agencies investigating market timing and other improper fund trading practices in the fund industry and is cooperating with the probes.
Evergreen said it does not believe the enforcement action or the investigations would have a “material adverse impact” on its funds. Any penalties or restitution that the company would have to make in connection with the action would be paid by Evergreen and not by its funds, the company said.
A spokeswoman for Evergreen could not immediately be reached for comment on the SEC allegations.
Contact Robert F. Keane with questions or comments at: [email protected].