The US Securities and Exchange Commission this week announced the distribution of approximately $55.6 million in Fair Funds to more than 200,000 investors who were harmed by fraudulent market timing in certain Bank One mutual funds (One Group Funds).
On June 29, 2004, the SEC brought settled administrative and cease-and-desist proceedings against BOIA and Mark A. Beeson, former President and CEO of One Group Funds. Both consented to the settled order without admitting or denying the SEC's findings.
The SEC found that BOIA had improperly allowed market timing in One Group Funds between June 1999 and May 2003, failed to charge required redemption fees in One Group Funds' international funds, and improperly released confidential portfolio holdings.
In addition to disgorgement and civil penalties, BOIA also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual fund governance reforms.
The Fair Fund resulted from the settled enforcement action, in which Bank One Investment Advisors Corporation (BOIA) agreed to pay $10 million in disgorgement and $40 million in civil penalties to settle charges of unlawful market timing. The entire Fair Fund, plus accumulated interest, has been distributed to investors.
"Returning money to investors injured by the unlawful market timing in this and other matters marks the continuation of the SEC's efforts to remedy the harm suffered by investors," explained Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.
The Sarbanes-Oxley Act of 2002 gave the SEC the authority to increase the amount of money returned to harmed investors by allowing civil penalties to be included in Fair Fund distributions.
Prior to SOX, only disgorgement could be returned to investors. To date, the SEC has distributed more than $2.5 billion in Fair Funds to injured investors.
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