PIMCO said regulators are considering taking action against the firm over marking of securities in the exchange-traded fund version of its flagship Total Return Fund.
Pacific Investment Management Co., Newport Beach, Calif., received a Wells notice from the Securities and Exchange Commission indicating SEC staff is recommending civil action against the firm related to an investigation into the ETF, the manager said Monday in a statement.
The notice relates to the fund's valuation of smaller positions in mortgage-backed securities not guaranteed by the government between its inception on Feb. 29, 2012, and June 30 of that year, as well as performance disclosures and related compliance policies and procedures, according to the statement.
“The Wells process provides us with our opportunity to demonstrate to the SEC staff why we believe our conduct was appropriate, in keeping with industry standards, and that no action should be taken,” the PIMCO statement said. “We will continue to engage with the SEC and we are confident that this matter will not affect our ability to serve our clients.”
The SEC sends a Wells notice to a company or an individual after its staff has determined that sufficient wrongdoing has occurred to warrant civil claims being filed.