Sept. 13, 2004 — Three units of Pimco Funds agreed to pay $50 million to settle charges by the Securities and Exchange Commission that they defrauded investors by permitting rapid trading in mutual fund shares.
Under the settlement, the units will pay $40 million in penalties and will disgorge $10 million. The affiliates — PA Fund Management LLC, PEA Capital LLC and PA Distributors LLC, all units of German insurer Allianz AZ — neither admitted or denied wrongdoing.
The three units also agreed to impose redemption charges and take other steps to guard against rapid trading and to take steps to strengthen its compliance systems and governance.
The SEC had charged that the three units permitted a hedge fund, Canary Capital Partners, to make rapid trades in Pimco’s Multi-Manager Series of funds from February 2002 to April 2003 in return for up to $27 million in long-term investments in an equity mutual fund and a hedge fund that generated management fees for two of the affiliates.
In June, the affiliates agreed to pay $18 million to settle charges of improper trading brought by the attorney general of New Jersey.
Contact Bob Keane with questions or comments at [email protected].