Investment management giant Federated Investors quarterly profits dropped 12% after taking a $20 million charge to cope with improper mutual fund trading.
The Pittsburgh-based company said fourth-quarter net income fell to $42.8 million, or 38 cents a share, compared to $48.9 million, or 42 cents a share, in the year-ago period.
The results included a charge of 12 cents a share for the creation of cash reserves to pay restitution to investors who suffered losses as a result of illegal late trading and deceptive market timing practices.
Federated said last week it set up a $7.6 million fund to repay harmed investors and used another $12.4 million to pay for its internal probe into questionable trading practices.
Excluding the one-time charge, the company posted net profits of 50 cents a share. Wall Street analysts, on average, were expecting Federated to earn 47 cents a share, according to research firm Thomson Financial First Call, sister company of Thomson Media, publisher of this newsletter.
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