A Securities and Exchange Commission (SEC) news release said the settlement calls for IF G to pay $215 million in disgorgement and $110 million in civil penalties, and requires AIM Advisors and ADI to pay jointly $20 million in disgorgement and an aggregate $30 million in civil penalties. IFG, a registered investment adviser to theINVESCOfunds; AIM Advisors, a registered investment adviser to AIM Funds; and ADI, a registered broker-dealer to AIM Funds, are subsidiaries of AMVESCAP LLP.
“We’re pleased to have this final settlement with our regulators,” said Charles Brady, executive chairman of AMVESCAP, in a separate statement Friday. “We deeply regret the harm done to fund investors and have taken strong measures to prevent any recurrence. Our focus going forward is to maintain the highest ethical standards as we strive to deliver strong investment performance to our clients around the world.”
By a separate order, the SEC also announced Friday it had settled charges against former NVESCOpresident and chief executive officer Raymond Cunningham for his role in IFG’s market timing program. That settlement requires Cunningham to pay $1 in disgorgement and $500,000 in civil penalties.
Friday’s announcement finalizes a pact first worked out last month (See INVESCO, AIM Reach Market Timing Settlements ).
According to the SEC announcement, its order outlined a series of factual findings:
- From at least 2001 through July 2003, IFG entered into undisclosed market timing agreements with more than 40 individuals and entities. Some of the timing agreements were entered into with the understanding that the market timer would maintain long-term investments, so-called “sticky assets,” in certain non-timedINVESCOfunds. At their height, the market timers held over $1 billion of the assets invested in theINVESCOfunds and made excessive exchanges and redemptions totaling approximately $58 billion.
- IFG financially benefited from these agreements by realizing advisory fees from the assets under management resulting from the timing agreements.
- As IFG’s president and chief executive officer during this time period, Cunningham was responsible for and approved IFG’s undisclosed market timing program.
Regarding AIM Advisors and ADI, the SEC found that:
- Between January 2001 and September 2003 AIM Advisors entered into 10 negotiated, but undisclosed, market timing agreements with individuals and entities, allowing the timers to exceed AIM Funds’ per-year 10-exchange limit, and to make trades, valued collectively at tens of millions of dollars, within AIM Funds.
- The market timing agreements financially benefited AIM Advisors in that AIM Advisors realized additional advisory fees from the timed assets.
- ADI negotiated and approved market timing agreements, provided materially misleading information about AIM Advisors’ market timing monitoring and prevention efforts to the board of trustees of AIM Funds, and financially benefited from the timing agreements.
Federal and state regulators have been pursuing a wide ranging probe of the mutual fund industry, focusing largely on market timing, late trading, and certain sales practices.