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Rating:Janus' Disclosure Draws the Media Spotlight Not Rated 5.0 Email Routing List Email & Route  Print Print
Wednesday, November 24, 2010

Janus' Disclosure Draws the Media Spotlight

News summary by MFWire's editors

Janus finds itself in the media spotlight Wednesday morning after it acknowledged contact from Federal investigators who are investigating possible insider trading at a number of investment shops. The news hit the papers just a day after the investigators raided three hedge funds. The request for information -- which has reportedly gone to dozens of asset managers -- does not necessarily mean that the firms are suspected of being involved nor does it mean that they are targets of the investigation. The only raids have been of three hedge funds.

Janus is one of a handful of mutual fund firms that have been tied to the investigation in media reports. Others include Wellington Management, MFS Investment Management, Prudential Financial (Jennison Dryden) and Deutsche Bank (which owns DWS Investments). There is no report of wrongdoing at those firms and the subpoenas are characterized as "broad."

A DWS Investments spokeswoman told The MFWire.com that the Associated Press article listing the mutual fund firms reportedly involved is inaccurate, and that DWS has not received a subpoena. She declined to comment on whether Deutsche Bank had received one.

Janus CFO Greg Frost confirmed the request for documents at the Denver-based fund firm in a tersely-worded filing with the SEC on Tuesday:
Janus Capital Group Inc. ("Janus") has received an inquiry regarding the recently disclosed insider trading investigation on Wall Street calling for general information and intends to cooperate fully with that inquiry. Janus does not intend to provide any further updates concerning this matter unless and until required by applicable law.
The price of Janus shares fell as much as 8.3 percent after the disclosure and closed down 2.8 percent for the day at $10.65.

The first report of the Federal Bureau of Investigation's insider trading investigation came last weekend.

On Saturday the Wall Street Journal named Janus, Wellington and SAC Capital as clients of John Kinnucan's Broadband Research LLC based in Portland Oregon. Kinnucan wrote an email to roughly 20 clients telling them that two FBI agents had asked him to "wear a wire" in calls with a client.

A Monday follow-up in the WSJ identified the firm that the FBI wanted to record the call with as SAC Capital Advisors. Janus and Wellington were only mentioned in the article as Kinnucan clients.

Janus' disclosure on Tuesday has sparked a spate of new coverage in newspapers. The Wednesday WSJ reports the disclosure and reports that a "person familiar with the matter" told it that Wellington Capital had received a request for "general information". The paper also reports on the request at SAC Capital and the FBI raids of Level Global Investors LP, Diamondback Capital Management LLC and Loch Capital Management LLC. All three firms are hedge funds.

The Wednesday New York Times Dealbook column reports that "SAC Capital and 2 Mutual Funds Are Subpoenaed". The Times reports that the subpoena requests at Wellington and Janus seek "a wide range of information." It adds that "several dozen" money managers hve received subpoenas so far during the investigation. A source tells the paper that government officials seek documents from parties of interest: either as witnesses or possible targets.

The NYT also quotes a letter from SAC Capital to investors which states that:
"Neither the subpoena nor any other information of which we are aware suggests that anyone at SAC has engaged in any wrongdoing. As you will surely appreciate, we will be a bit constrained in future comments."
Meanwhile, the Associated Press article on Wednesday stressed that only hedge funds were raided. That report also quoted MFS spokesperson John Reilly as telling it that the Boston firm has not received any official requests for information.

Traders in New York City making their commute to work on Wednesday morning also likely encountered coverage in the New York Post. The tabloid also quotes from the SAC Capital client letter, noting that the subpoenas are "extraordinarily broad" and shed little light on the investigation and its targets. 

Edited by: Sean Hanna, Editor in Chief

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