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Rating:INVESCO Could Be Hit With Civil Charges Not Rated 3.2 Email Routing List Email & Route  Print Print
Tuesday, December 02, 2003

INVESCO Could Be Hit With Civil Charges

by: Nicole Halsey

Sources told the Wall Street Journal today that INVESCO could be facing securities fraud charges in the next few days from the New York Attorney General's office and the Securities and Exchange Commission.

People familiar with the probe said the charges would be based on the activities of about two dozen hedge funds and that roughly $1 billion in assets were involved in alleged wrongdoing. One or more company officials could also be named in the suit.

However, yesterday in a statement, INVESCO's Douglas Kidd, managing director, corporate affairs said the firm has followed the rules.

"INVESCO Funds Group (IFG) has responded in a so-called Wells submission to the SEC that contains facts, information on industry practices, and public policy considerations that demonstrate compliance with its prospectuses, legal obligations, and most importantly, its fiduciary duty to clients," he said. "IFG has not engaged in any wrongful conduct. Any charges that may be filed against IFG or its employees will be vigorously contested."

But, in a previous statement, the company admitted to allowing timing in several of its funds and made a deal with timers to allow them to continue their activities as long as they were closely monitored and only invested in certain funds and in certain freqencies. Kidd added the agreements with market timers didn't harm Invesco's shareholders.

Still, in today's Journal article, current and former Invesco managers blasted the company for looking the other way while timers continued to hurt fund profits with their activities.

Jerry Paul, formerly manager of an Invesco junk bond fund until January, told the Journal that about $200 million of the $1 billion invested in the portfolio was invested by timers. He also said most of those assets came from hedge funds but did not name any. Spitzer and former fund managers have named Canary Capital Partners and American Skandia as partners, however.

Paul continued that soon after a 1998 meeting in which he expressed his concerns about timing to senior INVESCO executives, the company placed 2 percent redemption fees on three funds. However, timers resurfaced soon after.  

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