The SEC announced Monday that PA Fund Management, PEA Capital and PA Distributors agreed to pay a $50 fine for defrauding investors in the PIMCO Multi-Manager Series of funds. Ten million of that sum is disgorgement and $40 million is a civil penalty.
The SEC accused PIMCO of allowing Canary Capital Parntners to time at least $60 million in and out of its funds between February 2002 and April 2003 in exchange for $27 million in "sticky assets." PIMCOs prospectuses, meanwhile, indicated the firm discouraged or limited rapid-fire trading, the SEC said. In settling the charges, the firm neither admitted nor denied the accusations.
Stephen Cutler, director of the SECs division of enforcement, called the settlement a "resounding victory for mutual fund shareholders. It includes sizeable monetary sanctions, restitution for shareholders and far-reaching reforms."
The settlement was in addition to civil fraud charges that the SEC brought against PIMCO in United States District Court in Manhattan and a federal suit against Stephen Treadway, the firms former chief executive officer, and Kenneth Corba, the former chief executive officer of PEA Capital.