Massachusetts Financial Services (MFS) acknowledged in a regulatory filing Wednesday that it is not totally out of the woods yet when it comes to SEC issues. The Boston-based fund firm is the subject of an SEC probe into directed brokerage and revenue sharing arrangements with distributors.
The revelation was made by SunLife of Canada, MFS' parent, in its regular quarterly filing with the SEC.
The latest probe stems from a November 2003 settlement made with the SEC and by Morgan Stanley DW, Inc. In that case the Morgan Stanley settled an enforcement action relating to the undisclosed receipt of fees from 14 mutual fund companies in return for preferred marketing of their funds.
MFS was one of the 14 fund companies reported to be on Morgan Stanley's preferred list, according to the filing.
MFS said it is cooperating with the SEC's investigation, which is ongoing. The filing added that certain of the SunLife's subsidiaries have received requests for information from the SEC and other regulators in connection with enquiries into directed brokerage and revenue sharing arrangements and are responding to these requests.
On February 5, MFS reached settlements with U.S. federal and state regulators related to administrative proceedings against the fund firm that alleged it provided false and misleading information in certain MFS fund prospectuses regarding market timing and related issues.
Under the terms of the settlements, MFS neither admitted nor denied wrongdoing. As part of the settlement with the United States Securities and Exchange Commission (SEC), MFS agreed to pay $225 million to compensate certain fund shareholders. That amount included a $50 million penalty and a $1 million administrative fine paid to the New Hampshire Bureau of Securities Regulation. MFS further agreed with the Attorney General of the State of New York to reduce fees on the funds it advises by approximately $25 million annually over the next five years.
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