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SEC Compensates Investors Affected By Undisclosed Market Timing

by Mike Godfrey, for LawAndTax-News.com, Washington

19 August 2008

The Securities and Exchange Commission (SEC) distributed on Monday more than USD18mn to more than 325,000 investors who were affected by undisclosed market timing in certain mutual funds managed by Denver-based Janus Capital Management LLC (JCM).

The distribution is the first in a series that will return approximately USD100mn to harmed investors as part of the Commission's 2004 settlement with JCM.

The firm had been charged with facilitating undisclosed market timing in some of its mutual funds.

"This case provides a tremendous amount of satisfaction to our staff as we are able to provide funds to hundreds of thousands of harmed investors," explained Dick D'Anna, Director of the SEC's Office of Collections and Distributions, adding:

"We look forward to completing the full distribution in the coming months."

Donald M. Hoerl, Acting Regional Director of the SEC's Denver Regional Office, commented:

"We are very pleased to begin distributing money in the Fair Fund to Janus investors harmed by market timing misconduct. This distribution is another example of the Commission's ongoing commitment to return money to injured investors."

The Fair Fund provision of the Sarbanes-Oxley Act of 2002 provides the SEC with authority to distribute financial penalties along with disgorgement to injured investors. Since 2002, more than USD4bn has been returned to investors.

The SEC brought and settled public administrative and cease-and-desist proceedings in 2004 against JCM.

Without admitting or denying the Commission's allegations, JCM consented to a Commission Order charging anti-fraud violations and requiring the respondents to pay USD50mn in disgorgement and USD50mn in civil penalties for distribution through a Fair Fund.

In addition to disgorgement and civil penalties, JCM also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual fund governance reforms.

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