Gary Pilgrim and Harold Baxter, co-founders of the money management firm Pilgrim Baxter & Associates Ltd., have agreed to pay record fines of $80 million each to settle charges that they allowed and profited from abusive fund trading, the Securities and Exchange Commission said Wednesday.
Mr. Pilgrim, 64, and Mr. Baxter, 58, also were barred from the money management industry for life, the SEC said. The financial penalties are the largest imposed on individuals in the 17-month investigation of trading practices in the $7.6 trillion mutual fund industry.
"The amounts being paid in this settlement are virtually unprecedented in civil cases,'' Stephen Cutler, the SEC's enforcement director, said in the statement. The penalties "reflect the severity of the misconduct and the fundamental breach of duty at issue … .''
Pilgrim Baxter & Associates agreed in June to $100 million of penalties and fund fee cuts to settle regulators' charges. Its founders were ousted last November. The Wayne, Pa., company, which was renamed Liberty Ridge Capital on Oct. 1, is a unit of Old Mutual PLC.
The largest previous penalty in regulators' fund trading cases was levied against Richard Strong, the founder and former chief executive of Strong Capital Management Inc. He agreed in May to pay $60 million to settle complaints that he, his family, and friends profited from improper trades.
Mr. Strong, also subject to a lifetime ban, is selling his company to Wells Fargo & Co.
