Sep. 10–The New York attorney general’s office, which is investigating mutual fund trading practices, has contacted Houston-based Invesco Funds Group Inc., the company said Tuesday.
In a statement on the company’s Web site, chief executive Mark H. Williamson said, “As part of this inquiry into mutual fund industry practices, Invesco Funds Group is one of many firms which have been contacted.”
He said the company is fully cooperating with Attorney General Eliot Spitzer.
Neither Invesco nor the Aim funds, which are both affiliates of Amvescap, were named in the attorney general’s complaint last week alleging improper trading activities by Bank of America and several other money managers.
Mr. Williamson’s statement said his company is closely following the New York investigation. Mr. Spitzer has alleged that the mutual fund arms of Bank of America and Bank One and mutual fund providers Strong Financial and Janus Capital allowed a New Jersey-based hedge fund, Canary Capital Partners, to profit at the expense of their fund investors.
Hedge funds are lightly regulated, highly secretive investment vehicles, mainly for the rich and institutional investors. The attorney general’s office alleged that a money manager at Canary Capital was allowed to buy and sell fund shares at a locked-in price after the market had closed and then would trade them the next day for a profit.
Additionally, e-mails released last week by Mr. Spitzer’s office indicated that some fund companies provided Canary with more frequent reports on their stock holdings than what was available to regular investors.
Canary used this information to correctly time stock trades. Mr. Spitzer has subpoenaed several other mutual fund companies, including Vanguard Group and Putnam Investments, and as many as 11 other hedge funds. Almost daily, another fund company announces that it is being investigated.
On Tuesday, Eaton Vance Corp., the largest U.S. manager of stock funds designed to minimize taxes, said it expects to receive an inquiry from the attorney general.
“I would venture to say that we and all other significant players will get requests for information,” Eaton CEO James Hawkes told Bloomberg News.
Mr. Hawkes said Eaton Vance sells its funds through more than 1,000 broker-dealers, including Security Trust Co. This Phoenix-based trading firm was also involved in some of the Canary trades, according to Mr. Spitzer.
“One of the concerns we all have is, were our shareholders disadvantaged because some of our funds were made available by Bank of America or STC to late trade?”
Mr. Hawkes said. “We’re in the process of trying to find out.”
For Invesco’s part, a company spokesman declined to offer any more information beyond Mr. Williamson’s statement.
Bloomberg News contributed to this report.
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