The SEC settled with Harold J. Baxter and Gary L. Pilgrim for fraud charges surrounding undisclosed market timing. Each has been ordered to pay $60 million 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. The SEC has also permanently barred both from the industry. Stephen M. Cutler, director of the SEC's division of enforcement, said the "severity of misconduct" warranted the unprecedented settlement amounts and permanent bars.

The SEC charged Baxter and Pilgrim with permitting more than two dozen account-holders to market time funds that limited other investors to four exchanges a year. Even after terminating market timing for most investors in the middle of 2001, they allowed certain personal acquaintances to market time through the end of the year.

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