Invesco CEO Raymond Cunningham got numerous warnings on the dangers and fallout from market timing but permitted it willingly, New York Attorney General Eliot Spitzer said yesterday, as he and the SEC filed fraud charges against both the firm and Cunningham.
The case presents "excruciating detail" on how the firm allowed 60 broker/dealers, hedge funds and investment advisers to move in and out of some of its funds, which the firm has countered, it "contained" by limiting the market timing to only a few funds.
The firm garnered about $900 million in timing assets last year alone, when turnover rates in the Invesco Small Company Growth fund were 22,064%, according to Spitzers suit.
"This was among the best-documented discussions of the impact on investors, and, frankly, the exhibits lay out in excruciating detail how well-informed senior management had been of the downside that investors face because of the timing," Spitzer told The New York Post for todays edition. "Their reaction was to let it continue."
Market-timing hedge fund firms, now drenched in the mutual fund industrys scandalous monsoon, started as early as 1998 at Denver-based Invesco and eventually changed the companys opinion about trading ethics, The Wall Street Journal reports.
Portfolio managers became gagged pawns in a king and queens game designed by the hedge funds and executives to curtail doom in the event of a market downswing, according to The Journal.
Invesco issued a statement saying it would contest the charges.