New Jersey regulators Tuesday filed civil fraud charges against the PIMCO mutual fund group, alleging that the company defrauded investors by allowing a hedge fund to engage in improper trading.
According to the complaint, PIMCO parent Allianz Dresdner Asset Management and three related companies, PEA Capital, Pacific Investment Management and Pimco Advisors Distributors, violated a number of securities laws when it allowed Canary Capital to market time their mutual funds.
New Jersey Attorney General Peter Harvey and Franklin Widmann, head of the New Jersey Bureau of Securities are seeking disgorgement of all ill-gotten gains, restitution for harmed investors and hefty fines.
"PIMCO's management stacked the deck in favor of Canary, dealing a losing hand to ordinary, long-term investors," Harvey said in a prepared statement. "The defendants stopped at nothing to increase their assets under management and fatten their fees, including violating their own policies prohibiting market timing."
The complaint noted that Canary made more than 200 market timing trades in a period of 18 months, which amounted to over $4 billion in purchases and redemptions.