CNN/Money One for credit card only hard offer form at $9.95 One for risk-free form at $14.95 w/ $9.95 upsell  

Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Mutual Funds
Pilgrim Baxter guys settle for $160M
Money will go to investors hurt in mutual fund timing scandal; two barred from securities industry.
November 17, 2004: 2:43 PM EST

NEW YORK (CNN/Money) - Regulators said Wednesday that Harold J. Baxter and Gary L. Pilgrim, two investors charged with fraud in a mutual fund timing scandal, have settled for $160 million.

The Securities and Exchange Commission and New York Attorney General Eliot Spitzer said the two men will pay $20 million in civil penalties and $60 million in restitution apiece. That money will then be combined with the $90 million paid by Pilgrim, Baxter & Associates, Ltd. in June and be distributed to injured investors.

The agreement resolves allegations that the two men, who founded the mutual fund family PBHG, allowed favored clients to rapidly trade in and out of funds while the fund company's policy sharply limited individual shareholders' ability to do the same.

"The amounts being paid in this settlement are virtually unprecedented for individuals in civil cases," Stephen M. Cutler, director of the SEC's Division of Enforcement, said in a statement.

"As founders of a company that bore their names, Mr. Pilgrim and Mr. Baxter should have set an example of integrity and fair play," Spitzer said. "Instead, they were at the center of improper conduct that deceived and harmed their clients."

As part of the settlement, Baxter and Pilgrim must cooperate with any ongoing investigations and both are barred from future employment in the securities industry.

The SEC and Spitzer had filed a civil suit against PBHG, Pilgrim Baxter & Associates and Pilgrim and Baxter, claiming the firm allowed several hedge funds, including one that Pilgrim had a stake in, to trade in and out of the PBHG Growth fund, while the fund's prospectus barred other investors from doing so.

In June Pilgrim Baxter & Associates agreed to settle the suit by paying $40 million in restitution and a $50 million civil penalty.

Under the Sarbanes-Oxley Act of 2002, all penalties in certain corporate cases can now go directly to reimburse victims. Prior to the act, any money paid in a civil fine would have gone to government coffers.  Top of page

  More on FUNDS
BRIC investing is officially dead at Goldman Sachs
Harvard endowment warns market is 'frothy'
Once all powerful, Pimco is a fast fading superstar
Black Friday quiz: Deal or no deal?
The best Black Friday deals of 2015
Why Russia and Turkey can't afford a trade war

graphic graphic