MFS Settles Market-Timing Charges with SEC, States
The firm is ordered to pay $225 million to shareholders; two top execs are out.
Ending months of speculation, MFS settled fast-trading and late-trading allegations Thursday with the Securities and Exchange Commission and the New York and New Hampshire Attorneys General.
The regulators ordered to firm to pay a total of $225 million to shareholders who were harmed when MFS allowed market-timing in 11 of its mutual funds, despite prospectus language that suggested quick-trading would not be allowed. (Fast-trading can dilute long-term shareholders' gains and add to a fund's expenses.) Officials say shareholders were further harmed when fast-trading clients placed illegal, after-hours trades in MFS funds. MFS says it was unaware that any late trades occurred in its funds and has vowed to seek restitution from the late-traders.