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Janus Close to Mutual Fund Settlement

Apr 26, 2004 |

Janus Capital is close to reaching a settlement with securities regulators over its role in the mutual fund trading scandal, sources familiar with the investigation say.

The deal, which could be announced as early as Tuesday, comes about a week after Mark Whiston stepped down as chief executive of the mutual fund company. Sources say the settlement will require Janus to pay about $200 million in fines and fee reductions.

Janus is said to be anxious to get a deal done before the Denver-based firm announces earnings on Wednesday. A Janus spokesman could not be reached for comment.

Officials with the Securities and Exchange Commission and New York Attorney General Eliot Spitzer declined to comment.

Janus was one of the first mutual fund companies to come under regulatory scrutiny. In court papers filed last September by New York Attorney General Eliot Spitzer, Janus was one of several mutual fund companies alleged to have allowed the Canary Capital Partners hedge fund to engage in abusive trading.

The trading scandal has cost top executives at other mutual fund companies their jobs, and there had been much speculation that Whiston ultimately would be forced to step down. Whiston will continue on as a consultant at Janus until the end of the year.

Janus previously set aside $31 million to cover investor losses due to market timing activity in some of its funds. Market timing, or frequent trading, can erode the value of a funds' assets.

The deal with Janus should put the total settlements in the mutual fund trading scandal above the $2 billion mark.

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