WASHINGTON -- Three companies that manage and market Pimco stock mutual funds have agreed to pay a total $20.6 million to settle allegations that they failed to disclose their use of fund assets to pay brokerages for steering customers to the funds.
The Securities and Exchange Commission yesterday disclosed an $11.6 million settlement of a civil lawsuit against PA Fund Management, PEA Capital, and PA Distributors. On Monday the companies agreed to pay $50 million to settle SEC charges of defrauding investors in Pimco funds by not disclosing an improper trading arrangement.
Stamford, Conn.-based PA Distributors said it had reached a similar agreement with California Attorney General Bill Lockyer that calls for a $5 million civil fine and a $4 million payment to cover the state's costs.
The SEC said that during 2000-2003, PA Fund Management, PEA Capital, and PA Distributors failed to disclose to the board of the Pimco Funds Multi-Manager Series and to shareholders conflicts of interest stemming from their use of fund assets to pay for ''shelf space" with selected brokerages.
None of the firms admitted to or denied the allegations in the settlement, in which they also agreed to tighten their disclosure procedures.
In a previous case, Boston mutual fund company MFS Investment Management agreed in March to pay $50 million to settle similar allegations by the SEC. Brokerage firm Morgan Stanley agreed in November to pay $50 million in a settlement with the SEC and the National Association of Securities Dealers for an alleged ''firm-wide failure" to fully disclose potential conflicts arising from its receiving payments from fund companies.