Waddell Settles Trading Claims, Will Lower Fees
Mutual fund management group Waddell & Reed Financial Inc. will pay $52 million and cut fees by $25 million over five years to settle allegations that three of its units allowed improper trading in shares of their funds, authorities said Monday.
Overland Park, Kan.-based Waddell also will make a series of internal reforms, the Securities and Exchange Commission and the office of New York Atty. Gen. Eliot Spitzer said.
Waddell was one of the few outstanding cases of the scandal involving improper market timing in fund shares that Spitzer uncovered beginning in 2003.
The SEC said Waddell would pay a $10-million civil fine and disgorge $40 million in improper gains. Waddell also said that it would pay $2 million to the Kansas securities commissioner’s office.
In addition, the company said it agreed with Spitzer to reduce fees charged by Waddell & Reed Advisors Funds and W&R; Target Funds by $5 million a year over the next five years.