Illinois Fund Sacks MFS

February 20, 2004 ( - Despite a $225 million settlement of federal improper fund trading charges earlier this month, MFS Investment Management lost another piece of business with word that the company has been fired by the Illinois Teacher's Retirement System. (TRS)

In a news release Friday, TRS said the Boston-based MFS had been on a watch list for performance reasons and because of the complaint from the US Securities and Exchange Commission (SEC). MFS had run a $664 million domestic large-cap growth mandate.

In its announcement, TRS said the MFS assets would be moved over to  S&P 500 index funds while a search for a new active money manager is carried out. TRS said Callan Associates would conduct the search.

In another offshoot of the continuing federal/state fund trading probe concentrating on late trading and market timing, TRS also announced that it was keeping INVESCO Global Asset Management on its watch list because of pending SEC enforcement action against INVESCO.  INVESCO manages a $705 million international equity assignment for TRS.

INVESCO Funds Group and its president and chief executive officer Raymond Cunningham were slapped with parallel state and federal civil fraud lawsuits in connection with allegations of widespread market timing (See Prosecutors: Invesco Engaged in Massive Market Timing Scheme ).  Also, MFS, which said it had been policing market timing, apparently missed 11 funds now under scrutiny because the company determined the funds were not at risk for stale market price (See MFS Misses Market Timing in 11 Funds ).

TRS is the retirement system for public school teachers and administrators employed in all Illinois public schools except the city of Chicago.   It serves more than 310,000 members and annuitants and had $29 billion in assets as of November 30.