Invesco Gets Charged With Civil Fraud

Updated from 3 p.m. EST

The Securities and Exchange Commission and the office of New York Attorney General Eliot Spitzer charged Invesco and its chief executive, Raymond R. Cunningham, with civil securities fraud Tuesday, alleging that the mutual fund firm allowed several hedge funds to make improper trades in breach of the firm's fiduciary duty.

The SEC and Spitzer's office say Invesco "fraudulently accepted investments by dozens of market-timers in Invesco mutual funds" to enhance its management fees. In doing so, Invesco violated its market-timing policies as stated in its prospectuses, the complaint said.

Invesco and Cunningham "willingly sacrificed the interests of mutual fund shareholders when market-timers dangled the prospect of higher management fees in front of them," said Stephen Cutler, the director of the SEC's enforcement division. "By granting special trading privileges to selected customers, they readily violated the fiduciary duty they owed to all shareholders and rendered meaningless the funds' prospectus disclosures on market-timing." ...