The Securities and Exchange Commission announced Tuesday the settlement of enforcement actions against three former Invesco executives for their role in a market-timing scheme that allowed preferred clients to make excessive trades in exchange for sticky assets.
Timothy Miller, former chief investment officer and a portfolio manager for Invesco Funds Group, Thomas Kolbe, the former national sales manager for IFG, and Michael Legoski, a former assistant vice president in its sales department, were ordered to pay $1 apiece in disgorgement and penalties of $150,000, $150,000 and $40,000, respectively.
Additionally, the trio was effectively banned from the industry for one year. Miller and Kolbe were further prohibited from serving as an officer or director of an investment company for three years and two years, respectively. Meanwhile, Legoski is prohibited from associating with any broker/dealer for one year. The three consented to the deal without admitting or denying any wrongdoing.
"Those investment advisors and their employees who permit these market-timing agreements at the expense of the funds will be punished," said Randall Fons, regional director of the SECs Central regional office.
Last December, the SEC and New York Attorney General Eliot Spitzer filed an administrative complaint against Invesco and former IFG chief executive officer and COO Ray Cunningham for knowingly permitting favored investors to trade in and out of Invesco funds at the expense of its long-term shareholders
Miller, Kolbe and Legoski, while not named in the original complaint, were added to the list of defendants after the U.S. District Court in Denver granted the SEC more time to evaluate the case. The case signaled a new chapter in the mutual fund scandal as it marked the first time a portfolio manager was formally charged with fraud. It was also the first time regulators have revised charges brought against a fund firm and its employees.
"The Commission will continue its investigation into market-timing practices and aggressively seek sanctions against those who participated in any wrongdoing," Fons said.
Invesco, a unit of Amvescap, and Cunningham have not reached an agreement with regulators to date, but are said to be "at the tail end of settlement discussions," according to Cunninghams attorney, Richard Caschette.