Nov. 5, 2004 — The investment advisor for Fremont mutual funds agreed on Thursday to pay $4.15 million to settle charges that it permitted market timing and late trading in the funds.
Fremont Investment Advisors Inc. will pay $2.15 million and restitution and $2 million in civil penalties under the settlement with New York Attorney General Eliot Spitzer and the Securities and Exchange Commission.
Spitzer had charged that the company permitted select investors to make rapid fire trades in the Fremont Mutual Fds:Global Fund (FMAFX) and the Fremont Mutual Fds:US Micro Cap Fund (FUSMX) between January 2001 and October 2002 at the expense of other shareholders.
In return, one investor had to make and keep an investment in the Fremont New Era Value Fund, one of whose manager’s was the firm’s then president and chief executive officer, Spitzer said.
In addition to the monetary penalties, the company agreed to take other measures to strengthen compliance and prevent improper trading.
The settlement was one of the prerequisites for the planned acquisition of 13 Fremont funds by Affiliated Managers Grp (AMG), which was announced in July. Fremont Advisors said it expects to complete the transaction “within the next few months,” subject to approval by shareholders of the funds.
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