The SEC today filed a civil suit in U.S. District Court in Wisconsin against Heartland Advisors, CEO William Nasgovitz and several of its executives for violating securities law through misrepresentation, mispricing and insider trading in the Heartland Advisors' High-Yield Municipal Bond and Short-Duration High-Yield Municipal Bond mutual funds. The value of the funds, and a smaller related fund, dropped by about $93 million between Sept. 28 and Oct. 13, 2000, when the company sought to correct the months of deliberate mispricing, the SEC lawsuit alleges.
The SEC also accuse Heartland's directors of failing to correct the mispricing when it first came to their attention. The SEC also charged FT Interactive Data, an independent data service, with aiding and abetting and causing certain pricing violations.
"We believe that this action taken by the SEC is not well founded. We will vigorously contest these allegations and believe we have a strong basis for our defense. Moreover, the specific allegation of insider trading with respect to Bill Nasgovitz is completely untrue," according to a statement from Heartland.
FT Interactive did not return calls for comment.