SEC Examining Allianz, NJ Deal

Allianz disclosed in an SEC filing that the Commission is examining the status of the consent order entered into with New Jersey “under a law that bars from the investment advisory business any entities(and affiliates) that are enjoined from securities law violations,” Dow Jones is reporting.   Allianz confirmed that it had responded to the SEC inquiry.

In early June, Allianz Dresdner and two of the firm’s units settled with New Jersey’s attorney general, who had charged Allianz Dresdner with permitting improper market timing of mutual funds.   Under the settlement , Allianz will be required to hire an independent counsel, approved by New Jersey, to conduct an annual audit for five successive years beginning in December 2004 to review the implementation of redemption fees, fair valuation procedures and market timing surveillance with respect to the MMS Funds. In addition, the settlement bars any disclosure to third parties of the portfolio holdings of the MMS Funds unless the disclosure is in accordance with Allianz written procedures, as approved by its general counsel, or is required by law or regulation.

The New Jersey complaint had alleged that hedge fund Canary Capital Partners LLC was allowed to engage in rapid trading of several stock and bond funds in exchange for Canary placing millions of dollars in a separate fund.   The settlement covered parent company Allianz Dresdner Asset Management of America LP as well as subsidiary firms, PA Distributors LLC (formerly known as Pimco Advisors Distributors LLC), and PEA Capital LLC, while the attorney general dismissed charges that had been filed against Pacific Investment Management Co. (Pimco), stemming from the same allegations (See  PIMCO Units Settle Garden State Charges ).   Terms of the deal required the three defendants to pay New Jersey a civil monetary penalty of $15 million as well as $3 million for investigative costs and further enforcement initiatives.  

The SEC filed similar charges against Allianz Dresdner and itsaffiliates in May.   Allianz said in its annual report Thursday that it’s continuing to negotiate with the SEC regarding the civil fraud charges.