The state of New Jersey is suing Allianz Dresdner Asset Management, alleging that the company defrauded investors by allowing market timing through its US mutual fixed income fund group Pimco.
In the civil suit, Attorney-General Peter Harvey charged the group and several affiliates with allowing hedge fund operator Canary Capital to make more than 200 market timing transactions in the bond subsidiary group funds over period of 18 months, equalling more than $4 billion. According to the lawsuit allegations, Canary made substantial investments in funds that generated huge fees and increased the defendants’ assets in exchange for granted access.
The funds timed by Canary had official statements banning market timing trading, and thus according to regulators committed fraud by making exceptions for certain clients.
Pimco is one of the largest money managers in the US, overseeing about $373 billion mostly in bonds. The alleged practices, Harvey said, harmed other investors in the PEA Target, Opportunity, Growth and Select Growth funds, as well as the Pims High Yield and Real Return funds. The state is seeking the return of illegal profits, restitution for investors, and civil fines