The Securities and Exchange Commission has charged RS Investment Management, CEO Randall Hecht and Steven Cohen, former chief financial officer, with allowing certain mutual fund investors to market time the firm's funds. These investors profited from the trades, potentially at the expense of other shareholders, and RSIM was able to earn "substantial advisory fees."
All parties neither admit to nor deny the charges. RSIM is paying the SEC $25 million total, including disgorgement of $11.5 million and a civil penalty of $13.5 million. The company has also agreed to "undertake significant compliance measures designed to protect against future violations," according to the SEC. In addition, the New York attorney general is requiring a $5 million reduction in fees over a five-year period.