Macon Telegraph – Martha Stewart complained that she was almost trampled by the scrum of reporters at her trial on charges she lied about a stock sale. Stephen J. Treadway’s trial, in the sameManhattan federal court, was considerably quieter, although the civil charges against Treadway were of far greater importance to average investors.
Treadway, former chairman of the board of trustees of the Pimco equity funds, was the defendant in the first mutual fund timing case to go to trial. On June 30, a jury found him liable for defrauding Pimco equity mutual fund investors through a market timing arrangement with hedge fund Canary Capital Partners LLC. Treadway faces possible civil penalties and other sanctions.
The jury found that Treadway allowed a single wealthy investor to engage in a practice closed to everyone else, a practice that ate away at other investors’ returns. It was only the latest chapter in the mutual fund market timing scandal, which first became public in 2003. Litigation and settlements continue, a reminder to investors that the mutual fund industry does not always act in the best interests of the little guy.
“When you invest in a mutual fund, you are trusting that every investor, big or small, rich or poor, is going to be treated the same. That’s not what happened at the Pimco equity fund,†said Randall R. Lee, Regional Director of the SEC’s Pacific Regional Office in Los Angeles. Treadway’s attorney did not return calls requesting comment.
