This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Invesco Says It Allowed Market-Timing, Faces Civil Charges

Updated from Nov. 24

Invesco acknowledged late Monday that it allowed market-timing activity with some of its funds and that the firm's parent, Amvescap (AVZ), faces civil fraud charges by the Securities and Exchange Commission and New York Attorney General Eliot Spitzer's office.

The disclosure, posted on the firm's Web site , comes in the face of mounting allegations about its funds. The firm was among the first to be issued a subpoena by Spitzer's office. ( An Oct. 30 article by raised red flags about several Invesco funds.)

According to several sources familiar with the matter, Invesco entered into market-timing relationships with several hedge fund firms, including Canary Capital Partners.

When questioned about Invesco's arrangements with specific hedge funds, Invesco spokesman David Bachert said, "Our company policy precludes us from disclosing client names and specifics of business dealings." The firm's release acknowledges that market-timing arrangements took place, but Invesco declined to mention the hedge funds involved or which funds were allowed to be timed. The statement also defended the market-timing arrangements as in the best interests of all of its fund investors.

Russ Kinnel, director of research at Morningstar, said, "It's an unusual release. Rather than saying, 'Timing happened and we regret it,' it's kind of a new tack." He added, "If you argue that you were doing this in shareholder interest, you have a pretty big burden of proof."

Invesco also said that based on its internal investigation, the firm has never knowingly permitted late trading. Further, Invesco has policies in place to detect harmful personal trading by portfolio managers and to prevent the "inappropriate distribution of confidential information regarding fund portfolio holdings," the statement said, adding, "our internal review has found that these policies have been effective."

An individual familiar with Spitzer's investigation confirmed that charges against Invesco, while not finalized or likely to come this week, would likely be civil and not criminal.

The defense of its market-timing arrangements and the reassurance that no late-trading knowingly transpired met with a positive response among analysts and investors. A Deutsche Bank analyst upgraded the stock to hold from sell, and its shares in London rose 7.5%.

In acknowledging its market-timing relationships, Invesco said it decided it could "better control certain asset allocators and momentum investors by restricting them to certain funds which, in its judgment, would not be adversely affected by their activities."

Invesco said Monday that "exceptions were made" to its prospectus guidlines on market timing. Invesco's current prospectus states that excessive short-term trading activity in the funds' shares "may hurt the long-term performance of certain funds," and details the tools in place to combat such trading.

Invesco also said that it has terminated trading privileges for "clients representing over $500 million in assets" during the past 12 months. The firm didn't say how long it had allowed the market-timing relationships.

Based on its review, Invesco said it continues "to believe that the actions taken by our funds have been consistent at all times with the best interests of fund shareholders."

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs