Disclosed in SEC filings this week, Seligman said it would continue to cooperate fully with the regulatory body. However, after conducting an internal review, Seligman announced it found neither instances of improper trades by its employees nor instances of late trading by mutual fund shareholders, according to a Dow Jones report.
What was unearthed by the New York-based mutual fund manager was one market timing arrangement in September that Seligman says was in the process of closing down before the first proceedings relating to trading practices within the mutual fund industry were publicly announced later that month. Going back three years, Seligman also identified three other market timing arrangements that had been terminated before the end of September 2002.
Overall, the firm said the impact of these arrangements on Seligman Funds was minimal, yet Seligman said restitution would be made to any fund that incurred financial harm as a result of violations of law or internal policies by the manager or its employees. Additionally, the company said other measures have been, and will be, taken as appropriate. Among the measures that are being considered, as outlined in Seligman’s SEC disclosure:
- disciplining employees
- strengthening policies and procedures regarding market timing at the firm
- implementing redemption fees
- an ongoing broader review of the company’s compliance policies and procedures beyond those relating to market timing and late trading.
The fund company said one employee has left the company in connection with the overall internal review.
Also of concern to the firm is the possibility of compensation arrangements with certain brokerages that may have violated some rules. However, even after reviewing its procedures, Seligman said it is confident that the Seligman Funds did not pay higher brokerage commissions in connection with the orders than the Seligman Funds would otherwise have paid for comparable transactions.