Three investors have sued the Janus mutual funds company in federal court, accusing it of illegal trading practices that harmed shareholders.
One suit alleges favored customers of the Denver-based company were allowed to “time” their mutual fund trades. The suit, filed Tuesday by Ronald Abrams of West Bloomfield, Mich., and Robert Waring of Great Neck, N.Y., seeks class-action status to include other investors who purchased Janus stock between October 1998 and July 2003, when the alleged misconduct took place.
A similar suit was filed Friday by Vivian Bernstein of New Rochelle, N.Y.
Janus spokeswoman Shelley Peterson declined to comment on the lawsuits.
Also named in the suit by Abrams and Waring is Canary Investment Management, a New Jersey-based hedge fund that agreed to pay back $30 million in profits from unlawful trading in addition to a $10 million penalty in a settlement with New York authorities this month over allegations of allowing trading at preclosing prices after markets closed. Ordinary traders who place late orders must pay the following day’s prices.
New York Attorney General Eliot Spitzer had accused Canary of obtaining special trading opportunities with leading mutual fund families – including Janus, Bank of America’s Nations Funds, Bank One and Strong – by promising to make substantial investments.
Janus was not accused of engaging in late-day trading, Peterson said.
“Market timing in and of itself is not illegal,” she said.
The Denver lawsuits, filed less than two weeks after the New York settlement, make similar allegations and seek monetary damages.
Janus chief executive officer Mark Whiston has said the company is taking steps to address market-timing issues.
Such steps include hiring an outside firm to evaluate any monetary impact to funds in which Janus permitted discretionary market-timing arrangements and providing restitution to affected shareholders.
Janus said investments by market timers represented less than 0.5 percent of its $150 billion in assets as of the end of July.
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On the Net: http://www.janus.com
