Janus Capital Group Inc. said Friday it will pay back $31.5 million gained from previously-disclosed market timing in its mutual funds, the short-term trading arrangements that have led toinvestigations by state and federal regulators.
Janus said it has not determined whether the money will be placed in funds that were affected by market timing or whether it will be given directly to shareholders.
Market timing isn’t illegal but many mutual fund managers say they don’t allow it because it may hurt profits for long-term shareholders.
The Denver-based company also announced changes in its board and to the contract of CEO Mark Whiston to provide tighter controls on the mutual fund manager.
None of the changes affects investigations by state and federal regulators and prosecutors, including the Securities and Exchange Commission, New York Attorney General Eliot Spitzer or Colorado Attorney General Ken Salazar, who is in settlement talks with Janus.
This fall, Spitzer brought public attention to Janus when he announced a settlement with a hedge fund accused of having improper trading agreements with Janus and three other fund groups.
Specifically, Spitzer said Janus allowed market timing trades against its own policies. Janus has not been charged but has said it had 12 market timing arrangements and that anyone involved has since left the company.
The $31.5 million payback was determined by the accounting firm Ernst & Young LLP, hired to determine the effect of market timing on shareholders and to recommend internal controls.
The money includes $22.8 million in net gains realized by market timers, $2.7 million of opportunity cost of those gains had they been available to the funds, $1 million of related fees and $5 million of waived redemption fees.
In morning trading Friday on the New York Stock Exchange, Janus Capital shares were up 59 cents, or 4 percent, at $15.42.
