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Sun Life Unit MFS Reaches Tentative Pact in Fund Probe

Jan 27, 2003 | Wall Street Journal

Massachusetts Financial Services Co. has reached a tentative agreement to pay $225 million in penalties and cut its management fees by $125 million to settle charges that it improperly allowed fast-moving traders to skim profits from long-term investors in its mutual funds, Tuesday's Wall Street Journal reported, citing people familiar with the matter.

If made final, the settlement with New York Attorney General Eliot Spitzer and the Securities and Exchange Commission would result in the second-largest penalty exacted so far in the four-month-old mutual-fund scandal. While the general terms of the agreement have been decided, final approval is needed from the SEC commissioners, who rarely turn back such agreements with its staff.

Under the terms of the tentative settlement, MFS, a Boston-based unit of Sun Life Financial Inc. would pay $175 million in disgorgement and $50 million in fines, according to people familiar with the talks. The fee reductions, which would be part of MFS's agreement with Mr. Spitzer's office but not the SEC, would amount to $25 million annually over five years, according to these people.

MFS is also expected to agree to a number of changes in the way the firm oversees its funds and to provide greater information about the fees it charges investors.

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