Calvert Investment Management and subsidiary Calvert Investment Distributors Inc. settled with the SEC over charges that the Bethesda, Md., firm improperly used mutual fund client assets to cover nearly $18 million in distribution and marketing costs, and that it paid expenses above the mutual funds’ expense caps, from January 2008 through December 2014.
In the settlement agreement filed Tuesday, the Securities and Exchange Commission also charged Calvert with having material misstatements about payments in fund prospectuses.
Calvert will pay $22.6 million —$17.8 million in disgorgement, $3.8 million in interest and a $1 million penalty — to settle the charges.
Eaton Vance spokeswoman Robyn Tice said the pending SEC cases were disclosed during the sale, and that the settlement will be paid by the former parent company, Ameritas Holding Co. “Old Calvert is dealing with the carryover legal and regulatory issues and providing appropriate reimbursement to shareholders,” Ms. Tice said. The new company, Calvert Research and Management, was not a party to the SEC action.
Ms. Tice noted that the activities cited by the SEC predate the arrival of President and CEO John Streur and Chief Operating Officer Vicki Benjamin, who discovered and reported them to the SEC. The SEC agreement notes that the fine was reduced to $1 million because of the self-reporting. Recent similar cases that were not reported by the firms involved had fines of $4.5 million and $12.5 million.