PEA Capital LLC, which manages mutual funds carrying the Pimco Funds brand name, has been notified by the Securities and Exchange Commission that the agency is considering an enforcement action against the firm related to market timing, Friday’s Wall Street Journal reported, citing a statement issued by the New York company.
PEA Capital is separate from Pacific Investment Management Co., or Pimco, the giant bond shop in Newport Beach, Calif., that has about $370 billion in assets under management, including mutual funds and other investments. Both firms are part of German insurer Allianz AG and sell mutual funds under the same Pimco Funds label.
PEA Capital, formerly known as Pimco Equity Advisors, was created in 1999 to focus on growth-style investing in stocks. With regulatory action possible against PEA, that means five of the 10 largest mutual-fund companies have been implicated to some degree in the mutual-fund share-trading scandal. With $143 billion in fund assets, Pimco Funds is the fifth-largest mutual-fund complex in the country, according to Financial Research Corp.
PEA Capital said it didn’t have specifics of the SEC allegations. In its statement, it outlined information it had provided to the SEC and state regulators, including an admission that for several months it allowed market timing by Canary Capital Partners LLC, a hedge fund that was at the center of the initial investigations into improper mutual-fund share trading by the New York attorney general.
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