The state attorney general’s office sued the parent corporation of the Pimco mutual fund group on Tuesday, charging it defrauded investors by allowing a major client to engage in improper trades worth more than $4 billion in four funds.
Hours later, the funds’ advisor acknowledged some improper trading had occurred, and announced plans to pay back about $1.6 million related to the transactions. PEA Capital LLC also said that the Securities and Exchange Commission was investigating.
The New Jersey lawsuit, filed in Superior Court in Essex County, alleges that Allianz Dresdner Asset Management of America allowed hedge fund operator Canary Capital Partners LLC and some affiliates to engage in more than 200 such transactions over an 18-month period from late 2001 through May 2003.
In exchange for the access, Canary made large investments in funds that generated substantial fees and other income for the defendants, the lawsuit contends.
An Allianz spokeswoman did not respond to telephone and e-mail messages seeking comment Monday and Tuesday. A spokeswoman for Canary, which is not charged in the lawsuit, did not immediately return a call seeking comment Tuesday. In September, Canary agreed to a $40 million settlement to resolve New York state accusations of improper trading.