The Securities and Exchange Commission (SEC) just made a firm pay a whopping $27 million to investors plus interest and performance adjustments after failing to waive fees for years.
Pacific Investment Management Company LLC (PIMCO) will also pay an additional $9 million to settle two enforcement actions relating to the disclosure and policies and procedures violations.
“In the first action, the SEC found that, from September 2014 to August 2016, PIMCO failed to disclose material information to investors concerning the use by PIMCO Global StocksPLUS & Income Fund (PGP) of interest rate swaps and the material impact of the swaps on PGP’s dividend.
In the second action, the SEC found that, from April 2011 to November 2017, PIMCO failed to waive approximately $27 million of advisory fees as required by its agreement with the PIMCO All Asset All Authority Fund.
Additionally, until at least 2018, PIMCO did not have adequate written policies and procedures concerning its oversight of advisory fee calculations and related fee waivers,” the SEC press release read.
“These cases highlight our continued focus on ensuring that firms adequately disclose material information and implement reasonably designed policies and procedures,” said Corey Schuster, Co-Chief of the Enforcement Division’s Asset Management Unit.
“PIMCO failed to comply with both of these critical obligations.”
PIMCO has since disbursed to investors the $27 million in fees that should have been waived, plus interest and a performance adjustment.
Without admitting or denying the SEC’s findings, PIMCO agreed to a cease-and-desist order and a censure in each action and to pay a combined $9 million penalty.
Also Read: SEC Charges Advisor in New ‘Naked Shorting’ Illegal Scheme
Other Recent SEC News
The Securities and Exchange Commission (SEC) announced on Monday that it charged investment adviser Sabby Management LLC and its managing partner, Hal D. Mintz in the latest naked shorting scheme.
The partners generated more than $2 million in illegal profits from what the regulator claims were in connection with a long running scheme involving misrepresentations and violations of rules for short selling and order making, as well as other violative trading.
This is one of the latest ‘naked shorting’ case in 2023 despite ‘experts’ in the financial industry still claiming the illegal practice to be a myth.
The SEC’s complaint alleges that, from at least March 2017 through May 2019, Sabby and Mintz repeatedly circumvented trading rules to conduct unlawful trades in the stock of at least 10 public companies.
Short selling is a legal practice where, generally, a trader borrows a security from a securityholder and sells the security at one price, speculating that the trader can buy the security at a lower price in the future before it must be returned to its owner.
As alleged in the complaint, for example, Sabby and Mintz engaged in illegal “naked short selling” by intentionally and improperly placing short sales when they knew or were reckless in not knowing that they had not borrowed or located the shares, and then failed to make timely delivery of the shares.
According to the SEC’s complaint, the purpose of Sabby and Mintz’s fraudulent scheme was to earn profits they could not have gained through legal trading.
“Additionally, as the complaint alleges, on occasion Sabby and Mintz used their naked short selling to artificially deflate the price of securities, allowing them to obtain more shares at a cheaper price”, said the SEC press release.
Read: Goldman Sachs is Under New Investigation by Fed and SEC
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