This page lists the SEC enforcement cases in which a Receiver, Disbursement Agent, or Claims Administrator has been appointed. Funds that are recovered and available for investors will be distributed according to an approved plan.
For example:
- Funds from Banc of America totaled $350,000,000,
- from Banc One totaled $50,000,000,
- from Capital Alliance totaled $250,000,000,
- from MFS totaled $50,000,000 and
- from Bridgeway Capital Management totaled $5,000,000.
for each orgnaization listed, you may want to find out whether a private class action has been filed against the company you invested in.
For additional information, please visit the SEC website: http://www.sec.gov/divisions/enforce/claims/alphatelcom.html
Specific Examples of penalties and profit disgorgement include:
Admin. Proc. File No. 3-11818
$375,000,000 from Bank of America
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In the Matter of
Banc of America Capital Management, LLC, BACAP Distributors, LLC, and Banc of America Securities, LLC,
Respondent.
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On the basis of this Order and Respondents' Offers, the Commission finds that:
Summary
1. From as early as July 2000 and continuing through July 2003, Banc of America Capital Management, LLC ("BACAP") and its predecessor entity Banc of America Advisers, LLC, the investment adviser to all mutual funds, or series, in the Nations Funds mutual fund complex (the "Nations Funds") as well as BACAP Distributors, LLC ("BACAP Distributors"), the distributor and administrator for Nations Funds, allowed certain market timing clients to engage in short-term or excessive trading and never disclosed this fact to other investors.
Administrative Proceeding File No.3-11359
$250,000,000 from Alliance Capital
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In the Matter of
ALLIANCE CAPITAL MANAGEMENT, L.P.,
Respondent.
(image placeholder)AMENDED ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTIONS 203(e) AND 203(k) OF THE INVESTMENT ADVISERS ACT OF 1940 AND SECTIONS 9(b) AND 9(f) OF THE INVESTMENT COMPANY ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER
I.Summary
1. This proceeding concerns Alliance Capital's negotiated, but undisclosed, arrangements with market timers -- arrangements that benefited Alliance Capital to the detriment of investors in mutual funds managed by Alliance Capital. In those arrangements, Alliance Capital provided "timing capacity" in mutual funds to known timers in return for or in connection with the timers' investments of "sticky assets" in Alliance Capital managed hedge funds, mutual funds and other investment vehicles, from which Alliance Capital earned management fees. Alliance Capital's single biggest timer received at its height $220 million in timing capacity in Alliance Capital mutual funds in return for investments at agreed ratios in hedge funds managed by some of the same portfolio managers. The prospectuses for these mutual funds gave the misleading impression that Alliance Capital sought to prevent timing in these mutual funds. Alliance Capital failed to disclose that, in fact, it negotiated agreements to permit timing in return for the sticky assets. At their height in 2003, Alliance Capital had over $600 million in approved timing in its mutual funds. Alliance Capital permitted these arrangements despite awareness of the harmful effects timing can have on mutual funds and the ability to detect and prevent inappropriate timing in mutual funds. By entering into these arrangements, Alliance Capital breached its fiduciary duty to the mutual funds in which it arranged the timing.
2. In addition to the arrangements, Alliance Capital accommodated timers through other means. In part in order to enable the portfolio manager of one mutual fund to deal with the effects of timers in his fund, rather than simply prohibit timing in the fund, Alliance Capital obtained approval of the mutual fund's board and shareholders to lift a restriction on futures trading in the fund. Alliance Capital failed to disclose to the fund's board or shareholders that one of the reasons for recommending the proposal was to accommodate better the Alliance Capital-approved timers.
3. Finally, Alliance Capital provided material nonpublic information about the portfolio holdings of certain mutual funds to at least one of the timers. This disclosure enabled that timer to profit from market timing in declining markets.
Administrative ProceedingFile No. 3-11450
$50,000,000 from MFS
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In the Matter of
Massachusetts Financial Services Company,
Respondent.
(image placeholder) NOTICE OF PROPOSED PLAN FOR THE DISTRIBUTION OF A FAIR FUND AND OPPORTUNITY FOR COMMENT
THE PROPOSED PLAN OF DISGORGEMENT
The Distribution Plan generally provides for distribution "fairly and proportionately to the MFS Funds the total disgorgement and penalty ordered in [the Order] based upon the amounts of brokerage commissions coded for fund 'Sales' attributed to each fund." The MFS Funds are the registered investment companies for which MFS is the investment adviser, including the retail mutual funds, registered closed-end funds, MFS Variable Insurance Trust, MFS Institutional Trust, and variable annuity and variable insurance funds known as MFS/Sun Life Series Trust and Compass Accounts. The proposed plan provides that each MFS Fund shall receive a proportionate share of the funds paid by MFS comprised of $1 (one dollar) in disgorgement and a civil money penalty of $50 million (fifty million dollars).
For the Commission, by its Secretary, pursuant to delegated authority.
__________________________Margaret H. McFarlandDeputy Secretary
ADMINISTRATIVE PROCEEDING File No. 3-11530
$50,000,000 From Banc One
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In the Matter of
BANC ONE INVESTMENT ADVISORS CORPORATION AND MARK A. BEESON,
Respondents.
(image placeholder) ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTIONS 203(e), 203(f), AND 203(k) OF THE INVESTMENT ADVISERS ACT OF 1940, AND SECTIONS 9(b) AND 9(f) OF THE INVESTMENT COMPANY ACT OF 1940
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”), and Sections 9(b) and 9(f) of the Investment Company Act of 1940 (“Investment Company Act”) against Banc One Investment Advisors Corporation (“BOIA”) and Mark A. Beeson (“Beeson”) (collectively, “Respondents”).
In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, Respondents consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940, and Sections 9(b) and 9(f) of the Investment Company Act of 1940 (“Order”), as set forth below.
On the basis of this Order and Respondents’ Offers, the Commission finds that:
1. From at least March 2002 through April 2003, BOIA, an investment adviser, and Beeson, President and Chief Executive Officer of One Group Mutual Funds (“One Group”) and a senior managing director of BOIA, violated and/or aided and abetted and caused violations of the antifraud provisions of the Advisers Act and the Investment Company Act by: (1) allowing excessive short-term trading in One Group funds by a hedge-fund manager that was inconsistent with the terms of the funds’ prospectuses and that was potentially harmful to the funds; (2) failing to disclose to the One Group Board of Trustees or to shareholders the conflict of interest created when Respondents entered into a market-timing arrangement with a hedge-fund manager that was potentially harmful to One Group, but that would increase BOIA’s advisory fees and potentially attract additional business; (3) failing to charge the hedge-fund manager redemption fees as required by the international funds’ prospectuses when other investors were charged the redemption fees; (4) having no written procedures in place to prevent the nonpublic disclosure of One Group portfolio holdings and improperly providing confidential portfolio holdings to the hedge-fund manager when shareholders were not provided with or otherwise privy to the same information; and (5) causing One Group funds, without the knowledge of the funds’ trustees, to participate in joint transactions raising a conflict of interest in violation of the Investment Company Act.
2. In addition, between June 1999 and May 2003, BOIA further violated the antifraud provisions of the Advisers Act and the Investment Company Act by: (1) allowing excessive short-term trading in One Group funds by a Michigan market-timer that was inconsistent with the terms of the funds’ prospectuses and that was potentially harmful to the funds; (2) failing to disclose to the One Group Board of Trustees or to shareholders the conflict of interest created when BOIA entered into a market-timing arrangement with a Michigan market-timer that was potentially harmful to One Group, but that would increase BOIA’s advisory fees; (3) failing to charge a Texas hedge fund redemption fees as required by the international funds’ prospectuses when other investors were charged the redemption fees; and (4) having no written procedures in place to prevent the nonpublic disclosure of One Group portfolio holdings and improperly providing confidential portfolio holdings to certain other entities.
3. The One Group funds’ prospectuses stated that One Group restricted excessive exchange activity in all One Group funds. BOIA enforced those provisions. But despite the prospectuses’ language, Beeson entered into an agreement with hedge-fund manager Edward J. Stern (“Stern”) pursuant to which Stern executed approximately 300 exchange transactions within certain One Group funds. This agreement was made in the hope that it would lead to additional business from Stern for various BOIA affiliates. The transactions, which occurred between June 2002 and May 2003, earned Stern a profit of approximately $5.2 million. In connection with some of those transactions, BOIA and Beeson also failed to charge Stern approximately $4 million in redemption fees, as required by those funds’ prospectuses.
4. Also despite language of the One Group funds’ prospectuses, from June 1999 to December 2001, BOIA allowed a Michigan market timer to execute approximately 100 exchange transactions in One Group international funds, resulting in a profit to the market timer of approximately $1.24 million. Further, in March 2003, certain BOIA employees allowed a Texas hedge fund to execute two exchange transactions in the international funds without collecting approximately $840,000 in redemption fees required by the prospectuses.
5. Finally, BOIA regularly provided listings of the confidential portfolio holdings of many One Group funds to favored clients (including Stern), prospective clients, and consultants when that information was not provided to the public, to the possible detriment of the funds and
$5,000,000 from Bridgeway Capital Management
____________________________________
In the Matter of : Order Approving Plan of Disgorgement
: Distribution and Appointing Administrator
Bridgeway Capital Management, Inc. and :
John Noland Ryan Montgomery, :
Respondents. :
____________________________________:
On February 10, 2005, the Commission published notice of the Plan of Disgorgement
Distribution (“Plan”) proposed by the Division of Enforcement (“Division”) in this proceeding.
The Plan proposed that $4,407,700 of disgorgement and $458,764 of prejudgment interest paid
by respondent Bridgeway Capital pursuant to the Commission’s Order issued on September 15,
2004, be distributed pro rata among the eligible current and former shareholders of Bridgeway
Capital’s Aggressive Investors 1, Aggressive Investors 2, and Micro-Cap Limited mutual funds,
who were overcharged as a result of the misconduct described in the Commission’s September
15 order.
The Commission received no comments in response to the publication of the Division’s
proposed Plan.
The Division proposes in its Plan, as amended on March 16, 2005, that Stephen Webster,
Assistant District Administrator, Ft. Worth District Office, be designated as Administrator of the
Plan.
Accordingly,
IT IS ORDERED that the Plan is approved; and
IT IS FURTHER ORDERED that Stephen Webster is appointed as Administrator of the
Plan in accordance with the terms of the Plan.
For the Commission, by its Secretary, pursuant to delegated authority.
_____________________________
Jonathan G. Katz
Secretary
