Fund managers to return $7m

11 September 2006

Five mutual fund managers are to pay investors a total of $7 million in compensation for the charging of excessive performance-based fees.

The Securities and Exchange Commission (SEC) announced the news following a wide-ranging investigation by the market regulator following a similar case of excessive fees involving a mutual fund in 2004.

The companies, Gartmore Mutual Fund Capital Trust, Putnam Investment Management, Dreyfus Corporation, Kensington Investment Group and Numeric Investors, were accused of unfairly taking performance fees by measuring their performance over a different time period to that used to measure stock performance.

The companies involved have paid the compensation without actually admitting any wrongdoing, as is typical in such cases.

Some, such as Putnam, said that they were happy to return their share of the money – around $1.3 million – because they were simply unaware that inflating the fees in the manner employed was improper.

According to the SEC, the offences occurred between 1997 and 2004.

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