FUND manager Amvescap has confirmed it is facing punishment in connection with the mutual fund scandal sweeping across the US, writes Patrick Hosking.

London-listed Amvescap, best known in Britain for its Perpetual and Invesco brands, faces fines from the Securities and Exchange Commission and from the New York Attorney General Eliot Spitzer.

Its Denver-based offshoot Invesco Funds Group “has been advised by the staff of the SEC and the NYAG of their intentions to recommend civil enforcement actions against IFG based on ‘market timing’ activities by certain investors in its mutual fund shares”, the company said.

Market timing is the exploitation of pricing inefficiencies by hedge funds and other professionals at the expense of the core customers of mutual funds – small, longterm investors.

Amvescap had restricted market timing to certain funds “which would not be adversely affected”. Customers who breached these restrictions were turned away and IFG had terminated trading privileges for customers with $500 million (295 million) in assets in the past year.

It denied allowing the illegal offence of “late trading”, whereby favoured professionals are allowed to trade after the daily deadline imposed on ordinary punters.

An internal review found that policies designed to detect harmful personal trading by staff had been effective.

Amvescap shares, down by around 25% since rumours of the US investigations surfaced, rallied 8p to 400p.