Pilgrim Baxter and its founders, Gary L. Pilgrim and Harold J. Baxter, were named today in separate lawsuits filed by the SEC and Eliot Spitzer, New York attorney general. Both suits claim a hedge fund in which Mr. Pilgrim and his wife have a substantial interest was allowed to engage in market-timing trades of the PBHG Growth Fund, which Mr. Pilgrim managed. They also allege Messrs. Pilgrim and Baxter facilitated timed trading of PBHG funds by clients of Wall Street Discount Corp., a broker-dealer that was operated by Alan Lederfeind, a close friend of Mr. Baxter; Mr. Lederfeind hasn't been named in any actions.
In a statement, Pilgrim Baxter CEO David J. Bullock said: "The individuals whose conduct is the focus of the complaints have resigned from the company and no longer have any association with Pilgrim Baxter or the PBHG Funds. We remain committed to cooperating with the SEC and New York attorney general to achieve a resolution to this matter, although we do not agree with all the factual allegations or legal conclusions contained in the complaints."
The SEC suit was filed in U.S. District Court in Philadelphia; Mr. Spitzer's suit was filed in New York State Supreme Court.