SEC Begins Fremont Probe

January 13, 2004 ( - Following the finding of an internal probe by Fremont Investment Advisors that improper trading had taken place in some of its funds, the US Securities and Exchange Commission (SEC) has kicked off an investigation into the firm.

Freemont also said in a regulatory filing that New York Attorney General Eliot Spitzer and the US Attorney in the Northern District of California have also asked for information, the company revealed, according to Reuters. Fremont said it was cooperating fully with the various inquiries.

The San Francisco-based company found special market-timing arrangements existed with a few clients that it said may have been inconsistent with its own and the management company’s mutual fund policies (See    Review Uncovers Possible Market Timing at Fremont ). It said no evidence was found of late trading, which is illegal.

Fremont said it did not know how the improper trades affected the value of shares for long-term investors in its mutual funds, but said that most of its funds were not market timed.

In addition, employees “believed to have initiated, negotiated or approved those arrangements” aren’t at Freemont any longer “for unrelated reasons,” the firm said.