This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

SEC Closes In on Pimco

Pimco Advisors, one of the most admired money managers in the world, conceded Friday that it will probably face an enforcement action by the Securities and Exchange Commission for allowing a hedge fund to carry out a market-timing trading strategy in its products.

The statement was issued as Pimco published a letter from its highest-profile executive, Bill Gross, that acknowledged mistakes but also implied the mutual fund investigation had gotten out of hand.

In a release, Pimco said the SEC staff will recommend a civil and administrative action seeking fines and restitution following an investigation of market timing in "certain open-end investment companies advised by PAFM," the advisers' equity arm. It said the SEC will probably go along with the recommendation.

In the letter to shareholders, Gross acknowledges that Pimco had an agreement with one of the main players in the fund scandal, hedge fund Canary Capital, allowing it to run a market-timing strategy in some of its funds.

"The investments we knew about, clearly acknowledged as 'timer' money, were made under an arrangement that did not violate the shareholder protection of our prospectuses, and which had monitoring provisions to prevent excessive trading," Gross and Pimco Chief Executive Bill Thomson wrote.

"To our knowledge, this Canary trading was infrequent, did not come close to violating the prospectuses and harmed no shareholders in the fund," the said. "In perfect hindsight, we wish we had never attracted the name Canary/Stern among our many thousands of loyal fund shareholders."

Gross, whose monthly missives on the Web site are required reading on Wall Street, also took a backhanded swipe at the market-timing investigation, implying it has turned into a witch hunt.

"I believe the SEC, Eliot Spitzer, and yes the attorneys general from New Jersey, California, and Massachusetts are performing a legitimate and valuable service, as are the press and the media in general. They are just doing their jobs and in most cases doing it well," he wrote. "Sometimes a cleansing process can go too far."

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs