Seligman Kicks in $2 Million after Internal Review

May 11, 2004 ( - J. & W. Seligman & Co. has paid almost $2 million to three of its own mutual funds, a move related to the industrywide mutual fund trading scandal.

The payments – $75,000 to the Seligman Global Growth Fund, $300,000 to Seligman Global Smaller Companies Fund, and $1.6 million to Seligman Global Technology Fund – were paid to funds that Seligman said “…represented potential for time-zone arbitrage,” a trading technique based on pricing inefficiencies that, while legal, is often discouraged by fund companies, according to Reuters, citing an SEC filing.

The closely held investment management company said an internal review had found no evidence of late trading, no improper trading activity by Seligman employees, and no improprieties relating to the disclosure of a fund’s portfolio holdings.   Earlier this year Seligman said it had found four instances of market-timing arrangements, and one employee had left the firm (see  Seligman Confirms Fund Probe, Denies Wrongdoing ).

Seligman said the amounts that were paid represent less than one-half of 1% of each fund’s net asset value.  

Regarding the Seligman Communications and Information Fund, the company said after a request by its independent directors it would waive 0.05% of its annual management fee for the fund over a two-year period beginning on June 1.