(Bloomberg) -- First Eagle Investment Management and FEF Distributors agreed to pay almost $40 million to settle SEC claims that they improperly used mutual-fund assets to pay for the marketing and distribution of fund shares.

First Eagle fund managers dipped into shareholder money to pay brokers that sell its product to new investors, the SEC said Monday in a statement announcing settlement of its administrative case. The payments are acceptable only if they’re part of a set plan, known as a 12b-1, approved by a fund’s board. The case is the first under an SEC initiative to protect fund shareholders.

“First Eagle and FEF inappropriately used money belonging to the shareholders of the funds to pay for services clearly intended to market the funds and distribute their shares,” Andrew Ceresney, director of the SEC’s enforcement unit, said in the statement.

The adviser agreed to disgorge almost $25 million -- roughly the amount of improperly used assets -- and pay $2.3 million in interest as well as a $12.5 million fine. The money will be returned to the accounts of affected shareholders. First Eagle, which agreed to be bought in July by Blackstone Group LP and Corsair Capital, settled the claims without admitting or denying the SEC’s findings.

“We sincerely regret this matter and have taken steps to strengthen our policies and procedures,” First Eagle said in a statement.

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