The two founders of the Pilgrim-Baxter mutual fund family have agreed to pay $80 million each to settle charges of improper trading to benefit themselves and friends at the expense of longer-term shareholders, it was announced Wednesday.
Under the settlements with the Securities and Exchange Commission and the office of state Attorney General Eliot Spitzer, Harold J. Baxter and Gary L. Pilgrim also will be permanently banned from the securities industry.
The SEC and Spitzer charged Baxter and Pilgrim and the company, Wayne, Pa.-based Pilgrim Baxter & Associates, a year ago with allowing certain favored clients -- and Gary Pilgrim -- to market-time their PBHG funds, despite company policies restricting the practice.
In another case, Franklin Templeton Investments agreed to pay $18 million to settle complaints that the mutual fund distributor failed to tell investors it paid brokers who recommended its funds, California Attorney General Bill Lockyer said Wednesday.
The San Mateo-based mutual fund agreed to refund $14 million of that amount to investors.