Allianz Dresdner Asset Management of America and units PA Distributors and PEA Capital agreed to pay $18 million to settle a civil lawsuit filed by Peter Harvey, New Jersey attorney general, over market-timing allegations. As part of the agreement, announced today, Mr. Harvey dropped the suit against bond manager Pacific Investment Management Co., according to a news release from the attorney general. Allianz Dresdner, PA Distributors and PEA Capital neither admitted nor denied the market timing allegations; Bill Gross, PIMCO's chief investment officer, was not named in the suit.
The settlement involves $15 million in civil penalties and $3 million for investigation costs and enforcement initiatives. Stephen Treadway, CEO of PA Distributors, must resign as board chairman of PIMCO's Multi-Manager Series Funds, and Allianz Dresdner must hire a state-approved independent counsel to conduct annual audits of PEA Capital for five years beginning in December.
In a joint statement with Allianz Dresdner Asset Management of America, PA Distributors and PEA Capital officials said they were pleased the lawsuit has been settled and their adoption of industry best practices indicates their commitment to shareholders. Settlement talks with the SEC on similar allegations continue, according to the firms.