In a letter to shareholders posted on its website , Evergreen’s President and Chief Executive Officer, Dennis H. Ferro, noted that the Securities and Exchange Commission has focused on “…an arrangement pursuant to which a broker at one of EIMC’s affiliated broker-dealers had been authorized, apparently by an EIMC officer (no longer with EIMC), to engage in short-term trading, on behalf of a client, in Evergreen Mid Cap Growth Fund (formerly Evergreen Small Company Growth Fund and Evergreen Emerging Growth Fund) during the period December, 2000, through April, 2003, in excess of the limitations set forth in the Fund’s prospectus.
Ferro also noted that another area of inquiry for the SEC was short-term trading from September, 2001, through January, 2003, “…by a former Evergreen portfolio manager of Evergreen Precious Metals Fund, a Fund he managed at the time.” That would appear to point the finger at which seems to validate an earlier Morningstar report that the SEC was looking into transactions by former Evergreen manager Prescott Crocker.
A recent report from Morningstar noted that Crocker was managing the fund during the time period that the market-timing activity is alleged to have taken place, and that John Madden, who served as comanager during the period, took a leave of absence from the fund in January 2001, effectively ruling out his involvement in the market-timing activities. Crocker retired last February.
Earlier this month it was reported that the Securities and Exchange Commission (SEC) was considering filing an enforcement action against Wachovia Corp’s investment advisory subsidiary, Evergreen Investment Management Company, LLC related to mutual fund trading (see SEC Considering Enforcement Action Against Evergreen ).