Retail Sales Chief at Pimco Quits Amid SEC Probe
The head of retail sales for Pimco mutual funds, facing civil fraud charges over alleged trading abuses involving the firm’s stock funds, resigned Thursday, the company said.
Stephen J. Treadway, chief executive of PA Distributors in Stamford, Conn., left “to pursue other interests,” a company spokesman said.
Treadway, 56, wasn’t available for comment.
The Pimco funds’ parent company, German insurance giant Allianz, has been in talks with federal and state regulators to settle allegations of trading abuses and to end a separate investigation into revenue-sharing deals with brokers selling Pimco funds.
As head of PA Distributors, Treadway oversaw retail stock and bond fund sales under the Pimco brand, short for Pacific Investment Management Co. The firm’s bond funds are based in Newport Beach; its stock funds are based in New York.
In May, the Securities and Exchange Commission sued Treadway, PA Distributors and PEA Capital, which manages the Pimco stock funds, alleging they defrauded investors by allowing a favored client in 2002 and 2003 to engage in fast-paced fund trading. The suit also named Kenneth W. Corba, former chief executive of PEA Capital.
The SEC civil case involves several of the Pimco stock funds, but it doesn’t include any of the firm’s much larger bond funds in Newport Beach.
PA Distributors and PEA have called the SEC’s charges “inappropriate.” Corba has denied wrongdoing.
The SEC, New York Atty. Gen. Eliot Spitzer and other regulators have filed suits against more than 12 fund firms since September, alleging that the companies permitted improper short-term trading schemes by well-heeled clients.
Treadway, PA Distributors and PEA Capital in June settled a trading-abuse suit that had been filed by the New Jersey attorney general.
An SEC spokesman in Washington on Thursday declined to comment on Treadway’s departure or on the agency’s case.
According to people familiar with the case, the SEC and Allianz are continuing to discuss a settlement of the charges. The two sides also are trying to negotiate an end to the SEC’s investigation of revenue-sharing deals, which involved payments to brokers to promote Pimco fund sales in recent years.
The SEC and California Atty. Gen. Bill Lockyer are looking into those payments and whether they were properly disclosed.
The two regulators also are investigating revenue-sharing deals involving San Mateo-based Franklin Resources Inc., which manages the Franklin and Templeton funds, and Los Angeles-based Capital Group Cos., parent of American Funds.
