Janus Reveals Planned $5B Redemption

July 29, 2004 (PLANSPONSOR.com) - The scandal plagued Janus Capital Group on Thursday announced that an unidentified client had announced plans to pull out about $5 billion in assets from the firm's coffers by the end of the year.

Janus Chief Executive Officer Steve Scheid said in a late day news release that the massive redemption would have to be approved by client’s board of directors in the next several weeks. “We appreciate the loyalty of our clients during the past bear market,” Janus Chief Executive Officer Steve Scheid said in a statement. “We’re disappointed when any client comes to this conclusion, especially given our improved performance and the steps we’ve taken to put our fund holders first. We continue working hard to deliver strong, consistent performance.”

Word of the move came after Janus had announced that its second-quarter earnings rose to $130.2 million, or $0.56 per share, versus $47.5 million, or $0.21 per share a year earlier. The company attributed the rise to a $228- million gain after the Denver-based company sold its share in Data Systems Inc., a data processing company, according to news reports.

Looking ahead, Janus said the fee reductions from its recent settlement with regulators and a decline in assets through the end of June will likely adversely affect future quarterly results by about $0.03 per share. Assets under management, which drive the bulk of earnings at asset management companies, fell to $135.4 billion at the end of June from $149.8 billion a year earlier, according to the news reports.

Janus reached a $226 million settlement in April with state and federal regulators over accusations it allowed abusive trading in its mutual funds, who have redeemed about $28.5 billion over the past nine months, the news reports said.