Janus Plans Reimbursements for Money Lost to Market Timing

"Janus Apologizes" is a phrase that merits comparisons to "Garbo Laughs!" Janus was the fund shop that made no apologies for its aggressive-growth approach to investing that led to explosive returns in the 1990s and an implosion during the bear market.

Well, it's been a topsy-turvy week for Janus Capital Group(JNS Quote) after New York Attorney General Eliot Spitzer named Janus as one of the fund firms that enabled hedge fund Canary Capital to make money in its funds at the expense of individual fund holders. The unofficial "no apologies" policy was shelved as the company acknowledged that it allowed market timing in some of its funds and announced measures to address the issues raised by Spitzer.

In a news release late Friday, Janus said it has hired an outside firm to evaluate whether there was a monetary impact to any funds in which Janus permitted "discretionary market-timing arrangements." If investors in the funds lost any money due to these arrangements, Janus will provide restitution, the news release said. The Denver-based shop also said it will return to shareholders in the affected funds all management and advisory fees it received from market-timing activities, which represent less than one-half of 1% of Janus' $150 billion in assets -- or less than $750 million.

"Our business is built on trust, and I personally apologize for any concerns we've caused our investors," said Mark Whiston, chief executive of Janus Capital.

Janus also said it is cooperating fully with state and federal authorities to resolve this matter. Also, the firm said it would work with regulators and would support uniform rules to regulate and restrict market timing. The firm didn't say which funds were involved, but Mercury and High-Yield were the two funds named in Spitzer's complaint.

'An Industrywide Problem'

The measures represent a sweeping attempt by Janus to acknowledge its behavior, make amends with fund holders and quickly head off a potential scandal that threatens the firm's livelihood.