The SEC has reached a settlement agreement with Harold J. Baxter and Gary L. Pilgrim for fraud charges surrounding undisclosed market timing. Each has been ordered to pay $60 in disgorgement and $20 million in civil penalties. This, combined with the $90 million that Pilgrim, Baxter & Associates was ordered to pay in July 2003, will eventually go to injured investors.
Also, the SEC has barred both from association with any investment adviser, investment company or transfer agent.
"The amounts being paid in this settlement are virtually unprecedented for individuals in civil cases," said Stephen M. Cutler, director of the SECs division of enforcement. "Along with the permanent bars, the monetary sanctions we have obtained here reflect the severity of the misconduct and the fundamental breach of duty at issue in this case."
The SEC has charged Baxter and Pilgrim with permitting more than two dozen accountholders to market time in funds that disclosed a limitation of four exchanges per year. Even after terminating market timing for most investors in the middle of 2001, Baxter and Pilgrim allowed certain personal acquaintances to market time through the end of the year. During this entire period, from 1998 through 2001, the company earned significant investment advisory fees.