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Invesco Employees Settle with SEC

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DENVER (–Three former Invesco Funds Group Inc. employees have settled Securities and Exchange Commission charges they helped outside investors conduct extensive market timing in Invesco mutual funds.

Timothy J. Miller, former chief investment officer and a portfolio manager; Thomas A. Kolbe, former national sales manager; and Michael D. Legoski, former assistant vice president in Invesco Funds Group’s sales department, all will pay penalties and serve various bans on participating in the investment industry, according to a statement from the SEC.

SEC officials ordered Messrs. Miller, Kolbe and Legoski to each pay US$1 in disgorgement. In addition, Messrs. Miller and Kolbe will pay US$150,000 each in penalties, and Mr. Legoski will pay US$40,000 in penalties. Under the Sarbanes-Oxley Act, some amount of disgorgement must be ordered in order for penalty payments to kick in, said Amy J. Norwood, assistant regional director of the SEC’s Central Regional office. Sometimes, when disgorgement amounts are difficult to calculate, the Commission can order some minimal amount to effect the penalty payments, she said.

All three men have been barred for one year from associating with investment advisers or investment companies. Additionally, Messrs Miller and Kolbe were barred for three years from serving as officers at investment advisory firms or investment companies, and Mr. Legoski was further barred from associating with any brokers or dealers for one year.

The SEC’s original charges, filed in December, included allegations that the three men, along with Invesco Chief Executive Raymond R. Cunningham, allowed selected institutional investors, including Secaucus, N.J.-based hedge fund Canary Capital Partners LLC, to conduct extensive market timing of Invesco mutual fund shares, in violation of policies outlined in the Invesco fund prospectuses.

The SEC complaint alleged Mr. Miller, as chief investment officer, was responsible for approving the market-timing agreements. Mr. Legoski was supposed to be watching the funds and identifying market timers, however he ended up playing a “significant role” in working out the timing agreement with Canary and others. Mr. Kolbe supervised Mr. Legoski and was also active in negotiating at least one market-timing agreement with an offshore fund, according to the SEC.

Randall J. Fons, regional director for the SEC’s Central Regional Office, said the settlement sends a message that investment advisers who condone market timing will be punished. “The Commission will continue its investigation into market-timing practices and aggressively seek sanctions against those who participated in any wrongdoing,” he said.

The New York State Attorney General also is pursuing civil charges against Invesco and Mr. Cunningham. That case is still active, however it could be moving toward a resolution in the next few weeks, according to people familiar with the case.

Officials from Invesco Funds Group’s parent, AMVESCAP plc, London, did not return a call seeking comment by press time.

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Contact Bob Keane with questions or comments at: [email protected].