The Securities and Exchange Commission (SEC) announced on Wednesday a settled enforcement action against Janus Capital Management LLC (JCM), for entering into undisclosed market timing agreements with certain investors.
The Commission ordered JCM to pay disgorgement of $50 million and civil penalties of $50 million, for a total payment of $100 million. JCM also consented to a cease-and-desist order and a censure, and agreed to undertake certain compliance and mutual-fund governance reforms.
Stephen M. Cutler, Director of the SEC's Division of Enforcement, said, "The $100 million that Janus has agreed to pay and the significant reforms that it has agreed to implement reflect the seriousness with which the staff views market timing arrangements. We will continue to investigate these improper arrangements in an effort to hold all responsible parties accountable."
Randall J. Fons, Regional Director of the Central Regional Office, added, "This settlement represents our view of the impropriety of the market timing arrangements entered into by Janus and the extent to which these undisclosed arrangements violated an investment adviser's fiduciary duty to investors. This settlement will ensure compensation for all victims of the harm that resulted from these improper arrangements and prevent this misconduct from happening again."
Based on this conduct, the Commission's Order finds that JCM willfully violated Sections 206(1) and 206(2) of the Investment Advisers Act and Sections 17(d) and 34(b) of the Investment Company Act and Rule 17d-1 thereunder. JCM consented to the entry of the Commission's Order without admitting or denying the findings.
In April of this year, Janus Capital Group Inc. agreed to pay $100 million in fines and restitution and lower its fees by $125 million to settle accusations of abusive mutual fund trading practices that benefited a few favored clients. Janus, the ninth-largest U.S. mutual fund manager, reached the April agreement with New York Attorney General Eliot Spitzer and Colorado Attorney General Ken Salazar.