Federated Investors Inc. announced Monday that it had resolved previously disclosed mutual fund trading inquiries through settlements with the Securities and Exchange Commission and the New York Attorney General's office.
The Pittsburgh asset management company said it agreed to pay $72 million for the benefit of fund shareholders, including a $45 million civil penalty. An escrow fund was established to distribute compensation to eligible fund shareholders according to a plan that will be created by an independent distribution consultant subject to approval by the SEC and the Federated mutual funds' independent trustees. This expense was recognized in Federated's previously issued financial statements.
In addition, Federated agreed to reduce the investment advisory fees on certain portfolios by $4 million per year over the next five years, based upon effective fee rates and assets under management at Sept. 30. Specific fund fee reductions will be determined by Federated in consultation with the independent trustees and will be reviewed with the N.Y. Attorney General's office.
As reported last year Federated has already paid about $8 million into certain funds as determined by an independent consultant and made significant changes in its organization, policies, and procedures.
Federated managed $207.4 billion of assets at Sept. 30 in 138 mutual funds and separately managed accounts for nearly 5,600 institutions and intermediaries including corporations, government entities, insurance companies, foundations and endowments, banks, and broker-dealers.
