DENVER (AP) – Janus Capital Group Inc. said Wednesday it hopes to know by the middle of next month how much improper trading arrangements cost its mutual fund shareholders.
The Denver-based company also should have a method for making restitution by then, chief operating officer Girard Miller said at an investor conference in New York. Janus has hired Ernst & Young to determine the impact of the trading, but the firm’s report is not yet complete, Miller said.
At issue is what’s known as market timing, a type of short-term trading that can benefit select investors at the expense of long-term shareholders. The practice is not illegal but prohibited by many funds, including Janus. Regulators have indicated that companies that prohibited market timing, but made exceptions for certain customers, committed fraud.
In September, Janus and three other mutual fund companies were named in a complaint by New York Attorney General Eliot Spitzer accusing hedge fund operator Canary Capital of market timing. According to the complaint, Canary Capital had agreements with Janus allowing it to conduct frequent trades.
Janus has since said that an internal review turned up 12 market timing agreements, with discretionary frequent trading occurring under four of them. The trading involved less than 0.25 percent of $150 billion in assets as of the end of August.
The agreements were not sanctioned or monitored by senior management, Miller said. Janus has said it intends to return management fees earned as a result of market timing arrangements and redemption fees that were waived.
Janus International head Richard Garland resigned earlier this week. Garland approved market timing despite concerns from several unidentified Janus employees who cited concerns about the activity, according to e-mails cited in Spitzer’s court filing.
Investors from around the country have filed at least 18 federal lawsuits against Janus, claiming that market-timing cost shareholders. The company has hired a former SEC director to review company policy.
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On the Net: http://www.janus.com
