PIMCO received an SEC exemption allowing it to continue serving as an investment manager to private funds and other clients, following a settlement announced Dec. 1 over charges of misrepresenting performance of its Total Return ETF, according to the Securities and Exchange Commission website.
PIMCO agreed to pay $20 million and hire an outside compliance consultant to settle the SEC charges, but did not admit or deny them. The charges relate to the fund's first four months when it was managed by former portfolio manager William H. Gross.
“PIMCO has made a showing of good cause” that it is not necessary to deny the exemption as long as the conditions of the order are met, said Sebastian Gomez Abero, SEC corporation finance division chief of small business policy, in the Dec. 1 letter granting exemption.
Pacific Investment Management Co. requested the exemption under Rule 506 of Regulation D, known as “bad actor” waivers, in a Nov. 1 letter to the SEC from Debevoise & Plimpton LLP partner Robert Kaplan, a former co-chief of the SEC enforcement division's asset management unit. Disqualification “would have an immediate and adverse impact on the firm and the firm's clients” and put PIMCO at a competitive disadvantage, he said, noting in the letter that its alternative investment business has grown significantly in the past decade. Between January 2010 and Sept. 30, 2016, PIMCO advised more than 50 alternative funds that relied on the exemption to raise more than $30 billion from investors, the letter said.