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."