GLOBAL - Fund management giant Amvescap has dropped plans to fight charges over its part in the US market timing scandal.
The firm had denied taking any part in the scandal and instructed its lawyers to fight charges from US Securities and Exchange Commission and New York State attorney general Elliot Spitzer, who alleged that Amvescap’s Invesco Funds Group and AIM Investment subsidiaries were involved in market timing.
However, following an internal investigation, Amvescap has backed down and promised that it will co-operate fully with the regulators’ investigation. It added that it was undertaking a comprehensive review of its practices and that any investor affected by the scandal would receive “full restitution”.
But one senior investment consultant – who declined to be named – warned Amvescap that while its actions would help to restore some confidence in the fund management industry, trustees would still be wary of it and the firms that had been implicated so far.
Schemes are reviewing firms involved in the scandal – most notably Putnam Investments – and the consultant said:
“In the US they reach for the lawyers as a reflex action. Having dropped the legal action it may speed up the solution to the incorrect trading practices.
“For most trustees, if their fund manager has been involved in this in the US, while they don’t have to do anything because the FSA is looking into it, they must have a niggle in the back of their mind.”
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