According to a statement from Pawlenty’s St. Paul office, the governor wants to know how much of the $39 billion managed by the State Board of Investment (SBI) is invested with a handful of fund companies touched by allegations of market timing and late-trading abuses. Pawlenty is also SBI chair.
Pawlenty said Minnesota Commerce Commission Glenn Wilson will also review the trading practices of the 14 Minnesota-based mutual funds for the timing and volume of trades, as well as employee and third-party trading practices.
Finally, Pawlenty said, Wilson will also ask the in-state funds to explain what – if any – trading problems have been identified by each company, and what corrective action is required. The funds include American Express Co. funds, Advantus Funds and Kopp Funds Inc., according to Bruce Gordon, a commerce department spokesman.
“There is no reason to believe that Minnesota mutual funds have engaged in illegal trading,” Pawlenty said in a statement. “Yet Minnesota consumers who invest want and need the assurance that each company has the proper controls and policies in place to prevent these kinds of abuses.”
SBI invests all state funds and the pension assets of the statewide public pension systems, totaling over 400,000 current and future retirees.
The ongoing fund trading scandal has produced charges that several mutual fund companies engaged in illegal trading practices involving employees or select investors. The US Securities and Exchange Commission and securities regulators in several states are investigating those allegations.
A growing number of state pension funds have pulled billions out of Boston-based Putnam after regulators had charged the company and two managers with securities fraud (See Texas Joins State Pensions Bailing On Putnam ).