The Securities and Exchange Commission (SEC) has fined US asset manager Pimco $20 million for misleading investors about an ETF fund performance.
Pimco’s Total Return ETF attracted investor attention as it outperformed its flagship mutual fund in just four months after its launch in February 2012.
In monthly and annual reports to investors, the SEC found Pimco had provided misleading reasons for the fund’s success and did not disclose that its performance was not sustainable in the long-term.
Pimco’s ‘odd lot’ strategy caused the ETF fund to overvalue its portfolio and so failed to accurately price the fund shares.
Andrew Ceresney, director of the SEC’s enforcement division, said Pimco had misled investors about the true long-term impact of its odd lot strategy.
“[Pimco] denied investors the opportunity make fully informed investment decisions about the Total Return ETF,” he said.
Pimco has agreed to pay the fine of $20 million and agreed to retain an independent compliance consultant to settle the charges, although did not admit or deny the SEC’s findings.