INVESCO KNEW IT SOLD OUT CLIENTS (civil fraud charges filed in timed trading deals)

NY POST ^ | 12/3/03 | JENNY ANDERSON

[Liz]

Mutual fund giant Invesco's top executive allowed market timing even though he had gotten detailed warnings about how much that was costing his legitimate investors, New York Attorney General Eliot Spitzer and the SEC charged yesterday.

Spitzer and the SEC filed civil fraud charges yesterday against both the firm and Invesco CEO Raymond Cunningham, demanding the firm pay fines and reimburse investors for fees earned while the improper trading was going on.

[Liz]

EXCERPT The rapid buying and selling that constitutes market timing hurts investors because portfolio
managers have to keep assets in cash to cover redemptions. In addition, such timing boosts transaction costs.

[blanknoone]

IIRC INVESCO recently sold to AIM. Hope they did their due diligence well enough to indemnify themselves against this...

[Liz]

Couldn't possibly have known the magnitude of it to adequately indemnify themselves against it. Timed trading is done sub rosa. They would have to have been tipped off or known firsthand of the practice......but still would not have known the day-to-day details.

[Liz]

Cunningham allowed more than 60 broker-dealers, hedge funds and investment advisers to time some of his funds in exchange for additional investments that bolstered management fees, the SEC alleges. Though the fund family has a policy limiting investors to four trades a year in a particular fund, Cunningham and other top managers allowed timers as many as 80 trades a year, according to Spitzer's complaint. As a result of being a "timing friendly" fund complex, Invesco Funds Group (IFG) was able to gather about $900 million in timing assets by mid-2002.

[HamiltonJay]

Oh no! You mean capitalists can't be trusted to self regulate and govern? and oversight is neccessary to keep the public from being screwed? Oh No!!!! That just can't be!


They steal nearly a billion dollars from grandma, and best any of em will get is maybe some minimum security jail time! It is time that White Collar criminals are treated just as harshly as their street crime bretheren... These execs should be behind bars for 25-life for this.

[Beck_isright]

These slime should be doing hard time with the burglars, rapists and other hardened criminals. That would end these practices tommorrow.

[SierraWasp]

BOOKMARKED!!! This is one of the best articles I've seen to make clear the timed trading situation and especially how it actually hurts regular investors. Everything I've seen previously just make it look like it was simply special treatment for insiders and didn't make clear the actual damage to all the others.

I understood it, but this article makes it plain for EVERYONE to better understand! They may have understood the "trading after the close" thing, but the timed trading thing just wasn't as easily explained to a lot of investors.

[Grampa Dave]

Thanks for posting this. I got a heads up on this from Fidelity last night and was thinking about posting it. Now I don't have too.

[Grampa Dave]

Cunningham allowed more than 60 broker-dealers, hedge funds and investment advisers to time some of his funds in exchange for additional investments that bolstered management fees, the SEC alleges.

Lets start pressuring these AG's to publish the names of these hedge funds. Are they avoiding publishing those with links to $orea$$ and the DNC?

[1Old Pro]

When they let Hillary off on her illegal profits, it sent a message to the industry that playing fast and loose would not be investigated. Another problem that the origins can be traced to the Clintoons.

[Liz]

Nice take.....the (gag) Clinton Legacy on display.

[Liz]

This is one of the best articles I've seen to make clear the timed trading situation and especially how it actually hurts regular investors.

I though the following excerpt was most illuminating for those who keep asking why timed trading is being prosecuted......besides the long-term disadvantages for the little guy being marauded by the insiders.

EXCERPT The rapid buying and selling that constitutes market timing hurts investors because portfolio managers have to keep assets in cash to cover redemptions. In addition, such timing boosts transaction costs.

[Grampa Dave]

There is a big issue that no one has brought up re these massive timing events.

That is the tax impact to average Joe or Joann when these A$$holes sell and swirl a mutual fund. If Joe or Joann owned those funds (ones not in an IRA or 401K), they probably got clobbered with taxes from the sales of the stocks being sold and bought again. Yet they probably made nothing from the sales and special timing deals, while Invesco and the Hedge companies made big profits and probably untaxed profits.

Sounds like a big class action suit against Invesco and other fund companies and the hedge companies involved to pay back the extra taxes from the market timing and selling that didn't benefit Joe and Joann.

[kitkat]

***Sounds like a big class action suit against Invesco and other fund companies and the hedge companies involved to pay back the extra taxes from the market timing and selling that didn't benefit Joe and Joann.***

Excellent thought, Grampa. There probably will be a class action suit. Unfortunately, the investors will get about $2.19 each and the class action attorneys will get the rest.

[Grampa Dave]

If the top dogs lose everything in a civil trial, it would be worth it.

[Beck_isright]

"That is the tax impact to average Joe or Joann when these A$$holes sell and swirl a mutual fund."

A great point. These jerks deliberately devalue their mutual funds by loading up on losers every December (at their investor's expense I might add) to lower the tax burden.

For those of you who think you understand the concept of a mutual fund, I direct you to the (deep concept for you liberal fans) historical writings about the U.S. stock market and economy from 1910 until 1939. Pay special attention to the term "holding company".