Amvescap, the London-based parent of Invesco Funds of Denver and AIM Advisors of Houston, on Tuesday revealed it has agreed to pay $451 million to settle with regulators allegations of improper trading activity at the two shops.
Under terms of the agreement, Invesco will pay $325 million in fines, while the deal carries a $50 million penalty for AIM. Of that $325 million, $215 million is for damages and $110 million in penalties. As for AIM, $20 million is for damages and $30 million in penalties.
In addition, the groups agreed to reduce fees by $75 million over a five-year period and surrender an additional $1.5 million for investor education to Colorado Attorney General Ken Salazars office.
The Invesco settlement was with the Securities and Exchange Commission, Salazars office, and New York Attorney General Eliot Spitzers office. The AIM portion of the deal was with the SEC and Spitzer. Also, the secretary of State of Georgia "is agreeable to the resolutions with other regulators," Amvescap stated in a press release.
"These sanctions and reforms should make it clear that regulators will respond aggressively when fiduciaries enrich themselves at the expense of their clients," Spitzer said in a statement.
Additionally, the firm said it has agreed to a range of corporate governance reforms including a requirement that the chairman of the Invesco and AIM funds board be truly independent with no prior connection to the company. Also, the two firms agreed to improve the way they disclose fees and expenses to investors.
"We deeply regret the harm done to fund investors and have taken strong measures to prevent any recurrence," said Charles W. Brady, executive chairman of Amvescap.
The deal brings a conclusion to a sometimes messy and drawn out ordeal that started with Invesco initially vowing to fight the charges and then later agreeing to work with regulators. It also featured several extensions in negotiations and a settlement by regulators with three former Invesco executives.