NEW YORK–(BUSINESS WIRE)–Dec. 22, 2003–Janus Capital, one of the first mutual fund companies to be implicated in the mushrooming market-timing scandals, recently issued the results of its internalinvestigation and voluntarily paid $31.5 million to customers in an aggressive attempt at damage control. What the once high-flying Denver company didn’t reveal, however, is that it was one of itstop portfolio managers who had opened the door to the secret trading abuses, reveals FORTUNE Senior Writer Peter Elkind in an exclusive, available online at fortune.com from 6:00 pm on December 22.
FORTUNE reports that Janus’ largest rapid-trading relationship began in late 2001, after Warren Lammert, longtime manager of the giant Janus Mercury fund, introduced a personal friend, Gregory Trautman, CEO of a New York brokerage firm named Trautman Wasserman, to colleagues at the Denver mutual-fund complex. After Trautman’s visit to Denver, his firm was allowed to engage in extensive market-timing of Janus funds (including Mercury), mostly on behalf of a few large hedge-fund clients. FORTUNE reports that Trautman’s activities both predated and dwarfed those of Canary Capital, a New Jersey hedge fund, whose arrangements with Janus and other fund firms resulted in a $40 million September settlement and publicly launched the scandal. Views differ on exactly when Lammert learned of Trautman’s activities.
“Word of Lammert’s role offers the first evidence of explicit knowledge by portfolio managers at Janus–and suggests that awareness of such arrangements was more widespread than Janus has previously indicated,” states Elkind in the FORTUNE piece.
