Federated Investors indicated Monday it is currently in negotiations with state and federal regulators over trading abuses by some of its employees. The Pittsburgh-based asset manager added that the Securities and Exchange Commission and the New York State Attorney General are deciding whether to recommend civil enforcement action against two officers.
Federated, which manages $178 billion in more than 135 mutual funds and other separately managed accounts, has been hit hard by trading scandals. In 2003, the company admitted that several of its employees had engaged in illegal, after-hours trading. Also, some Federated officers allowed New Jersey hedge fund Canary Capital to engage in rapid in-and-out trading in funds, commonly known as market timing.
Last year, Federated said it had punished and fired several employees for improper trading. It also announced that it would pay $7.6 million to shareholders in damages.
Trading scandals such as those at Federated came to the forefront when regulators began a widespread investigation of improper trading practices in the $7.4 trillion mutual fund industry in the fall of 2003.
Federated did not give a timetable on when a settlement would be reached.