This story contains corrected material regarding the Department of Labor's allegations.
An Invesco Ltd. subsidiary will pay $10.3 million to settle claims brought by the Department of Labor that its Invesco Short-Term Investment Fund violated the Employee Retirement Income Security Act when it undertook a series of measures to ensure that the fund could continue to trade at $1 even if net asset value was below $1.
According to the Employee Benefits Security Administration, those measures were to ensure that the ISTIF continued to trade at $1 even if the fund's net asset value had fallen below $1 due to losses in the value of the fund's securities holdings
EBSA officials said the fund had Invesco Trust enter into support agreements for financial support if the NAV dipped below $1, and the fund retained some income earned to increase its net asset value instead of distributing it to investors.
DOL investigators also found that Invesco Trust did not adequately disclose these measures to the investors.
Invesco spokeswoman Jeaneen Terrio said in an interview that Invesco fully cooperated with the investigation, and while it did not admit or deny the charges, it agreed to take steps to resolve the issue. “Invesco fully believes that our use of the product was appropriate,” Ms. Terrio said. The fund currently has $3 billion in assets.
Under the settlement agreement, investors will be reimbursed for losses related to the fund's keeping the income and will get regular disclosure from Invesco on ISTIF holdings, actual market value and any supporting measures used to bolster ISTIF's net asset value.
In a statement, Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi said the subsidiary, Invesco Trust, “stepped up to the plate by agreeing to compensate their ERISA plan clients.”