Evergreen to pay $32.5m SEC settlement

Wachovia Corp's Boston mutual fund division Evergreen Investment Management Co. agreed to pay $32.5 million to settle allegations it allowed certain shareholders to market-time in violation of prospectuses, the Securities and Exchange Commission said today.

The settlement included Evergreen of Boston, three local affiliates and a former officer, and continues a series of settlements the SEC has reached with mutual fund complexes over practices that rocked the industry earlier in this decade.

Market-timing refers to trading rapidly in certain market sectors, which can diminish returns for shareholders as a whole and so is often limited by fund prospectuses. The SEC said Evergreen failed to adopt procuedures to enforce its own limits until October of 2003, and that from September 1998 to June 2004, excessive trading reduced the funds' value by nearly $29 million.

None of the parties admitted or denied wrongdoing as part of the settlement. Evegreen said in a statement that "Fund shareholders will not bear any of the costs associated with the settlement. Evergreen will work with an independent distribution consultant, to be approved by the SEC and by the Funds Independent Trustees, to develop a plan to distribute the proceeds of the settlement.''
(By Ross Kerber, Globe staff)