Fremont Investment Advisors
, a small mutual fund family, is the latest firm to settle with securities regulators over allegations it permitted select investors to engage in improper trading.
In settling with the
Securities and Exchange Commission
, the San Francisco-based firm agreed to pay $4.1 million in fines and restitution. Regulators contend Fremont struck secret deals with mutual fund market timers and one of its employees allowed an unidentified brokerage to place after-hours trades.
To date, more than a dozen mutual fund firms have settled with regulators in the 14-month-long investigation, agreeing to pay nearly $3 billion in fines, restitution and fee reductions.
"This is a disturbing indicator, that the abuses we have seen in the industry extended even to smaller, regional firms,'' said Marc Fagel, assistant district administrator of the SEC's San Francisco office.
Regulators contend market timing, or the frequent trading of fund shares, is unethical and harmful to long-term investors because it increases the administrative costs for the fund. Late trading, meanwhile, is an illegal practice in which someone buys shares of a mutual fund after their 4 p.m. closing price in order to take advantage of late-breaking, market-moving news.
Two former top executives at Fremont, which has $2.8 billion in assets, also were charged in the matter, which was brought in conjunction with New York Attorney General Eliot Spitzer.
Meanwhile, in an unrelated regulatory matter, the SEC fined
$37 million to settle allegations in a stock-trading case that stems from the bank's 2001 merger with
. The SEC contends the bank failed to disclose that it had purchased $500 million shares of First Union stock, during a time there was a bidding war for Wachovia with