A statement posted on the Web site of the British firm that owns both US fund companies said the IFG deal is with the Colorado and New York state attorneys general and the US Securities and Exchange Commission (SEC). The AIM agreement is with New York Attorney General Eliot Spitzer and the SEC, parent company AMVESCAP PLC said in its Web announcement.
Under terms of the agreements, IFG will pay $325 million, of which $110 million is civil penalties, while AIM will pay a total of $50 million, of which $30 million is civil penalties. According to the AMVESCAP statement, the New York and Colorado agreements also call for management fees on the AIM/INVESCO funds to be reduced by $15 million per year for the next five years. An independent consultant will be retained to oversee the distribution of the restoration fund amounts to mutual fund shareholders.
All of the pacts are subject to the signing of final settlement documents, the statement said, while the SEC agreements still have to be approved by the commission.
In addition to the corporate governance changes to be adopted as part of Tuesday’s regulatory agreement, AMVESCAP has initiated other changes, according to the company This year, AMVESCAP initiated a program to significantly increase its legal, compliance, and internal audit capabilities. AMVESCAP also created a companywide compliance reporting line that provides employees and others with a confidential way to voice concerns about potentially improper activity.
“We deeply regret the harm done to fund investors and have taken strong measures to prevent any recurrence,” said Charles Brady, Executive Chairman of AMVESCAP. “Our firm was founded on principles of integrity and care for our clients. Our fundamental commitment has been – and must continue to be – to uphold our clients’ trust by putting their interests first. It has been painful for AMVESCAP employees at all levels to learn that these core values were not always upheld, impacting our customers and damaging the reputation of our company. With these agreements, we rededicate our firm to maintaining the highest ethical standards as we focus on delivering strong investment performance to our clients around the world.”
Despite the settlements at the corporate level, a key player in the state/federal probe, Raymond Cunningham, the former INVESCO chief executive, hasn’t yet agreed to a settlement and continues to face civil fraud charges from the SEC and state authorities.
Tuesday’s development came about a week after three former INVESCO executives agreed to fines and one-year bans from the mutual fund industry to settle market-timing charges. Former chief investment officer and portfolio manager Timothy Miller and ex-colleagues Thomas Kolbe and Michael Legoski agreed to pay a total of $340,000 in fines. The three neither admitted nor denied wrongdoing (See SEC Fines Former Invesco Employees $340,000 ).