Waddell And Reed Settles Market Timing Actions

by Glen Shapiro, LawAndTax-News.com, New York

27 July 2006

Waddell & Reed Financial, Inc. announced on Monday that three of its subsidiaries have finalized settlements with the US Securities and Exchange Commission, the Attorney General of the State of New York, and the Kansas Securities Commissioner to settle previously disclosed, and now completed, investigations concerning market timing in the Waddell & Reed Advisors family of mutual funds.

The three subsidiaries are: Waddell & Reed Investment Management Company, Waddell & Reed Services Company, and Waddell & Reed, Inc.

Under the terms of the settlements, Waddell & Reed neither admits nor denies any of the regulators' findings or allegations.

The Company will pay a total of $50 million that will be distributed to the funds pursuant to a plan to be developed by an independent consultant and approved by the funds' boards of directors.

Waddell & Reed also agreed with the Kansas Securities Commissioner to pay a $2 million fine that will be designated for investor education, and with the New York Attorney General to reduce management fees by $5 million per year for each of the next five years in the Waddell & Reed Advisors Funds and the W&R Target Funds.

"These settlements have been in process for some time and relate to matters well in our past. Their completion is a positive event," announced Henry J. Herrmann, CEO of Waddell & Reed Financial, Inc.

The Company estimates that the pre-tax charge for the second quarter to record the expense of this settlement will not exceed $55 million.

Recommended