Fund Manager Charged, Compliance Said Ignored

The Wall Street Journal reports that US state and federal regulators have now filed civil charges against Invesco Funds Group, a division of UK fund management group Amvescap, and its chief executive, Ray Cunningham. The firm has been accused of violating its own mutual-fund trading rules and engaging in wide-scale market timing trading arrangements.

The firm is said to have tolerated the bad practices despite criticism from its own compliance officer and evidence that suggested a number of fund managers expressed concerned about what was going on. New York state Attorney General Eliot Spitzer said that 'this case should send out a clear signal that companies that tolerated timing in violation of their prospectus will face fraud charges'. Stephen Cutler, director of enforcement at the Securities and Exchange Commission said that Invesco and Cunningham were in a 'classic breach of their duty'.

Investigators are said to have discovered a series of e-mails sent by the firm fund managers, which complained about the market timing trading practices. Market timing can turn a quick profit but was generally 'outlawed' by the funds industry because of the negative impact it can have on more longer-term investors.

Invesco has insisted that it has been playing by the rules and Amvescap now says that it will 'vigourously' contest the charges.

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts