SEC Press press_release 5 KB 2,089 chars

Press Release: SEC Announces Final Disbursement to Investors From $267 Million Pilgrim Baxter Fair Fund

Release: 2007-181

summary

The SEC distributed $267 million to over 384,000 investors harmed by fraudulent market timing orchestrated by Pilgrim Baxter & Associates, Ltd. between 1998 and 2001, with the final $69 million disbursed in September 2007 using civil penalties enabled by the Sarbanes-Oxley Act.

paragraph

Pilgrim Baxter & Associates, Ltd. engaged in fraudulent market timing in the PBHG Funds from June 1998 to December 2001, allowing favored clients to exploit rapid trades that diluted returns for long-term investors. The SEC charged the firm and its principals, leading to a Fair Fund that distributed $267 million in total—$69 million as the final disbursement on September 12, 2007—using civil penalties and disgorgement made possible by the Sarbanes-Oxley Act of 2002. This marked one of the largest investor recoveries under the SEC’s Fair Fund program, which by 2007 had returned over $2.5 billion to harmed investors nationwide.

narrative

Between June 1998 and December 2001, Pilgrim Baxter & Associates, Ltd., the investment adviser to the PBHG Funds, facilitated fraudulent market timing by permitting favored clients to execute rapid, frequent trades that eroded returns for long-term investors. The SEC initiated enforcement actions against Pilgrim Baxter and its principals, resulting in civil penalties and disgorgement orders that formed the basis of a Fair Fund to compensate harmed investors. On September 12, 2007, the SEC completed the final $69 million disbursement, the third and last in a series of payments totaling $267 million to more than 384,000 affected account holders. This distribution was made possible by the Sarbanes-Oxley Act of 2002, which for the first time allowed civil penalties—beyond just disgorgement—to be returned directly to investors. The case was a landmark in investor protection, demonstrating the SEC’s enhanced ability to recover and redistribute funds after fraud. By the time of the final payout, the SEC had distributed over $2.5 billion through Fair Funds across multiple cases. Investors were notified and could access details via the official settlement website and hotline established for the distribution. The resolution underscored the importance of regulatory reforms in holding financial firms accountable and restoring investor confidence.

Enriched metadata

Scheme: investment-adviser-fraud (100%)
Victim loss: $2,500,000,000

Classified investment-adviser-fraud(confidence 100%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →

Extracted insights

Dollar amounts 4

$2.50B $2.5 billion ≥$1B
$267.00M $267 Million $100M–$1B
$267.00M $267 million $100M–$1B
$69.00M $69 million $10M–$100M

Entities 16

person Amy J. Greer
person associate regional director
agency at http://www.sec.gov
agency at http://www.sec.gov/litigation/admin/2006/34-54812-dp.pdf
agency at http://www.sec.gov/litigation/admin/2006/34-54812.pdf
person Catherine E. Pappas
person Daniel M. Hawke
person distribution plan
person Elaine C. Greenberg
company final disbursement to investors from $267 million pilgrim baxter fair fund
company pilgrim baxter & associates, ltd.
person regional director
person regional trial counsel
agency sec philadelphia regional office
agency Securities and Exchange Commission
person senior trial counsel

Triples 19

SEC Announces Final Disbursement to Investors From $267 Million Pilgrim Baxter Fair Fund
SEC announced the completion of the distribution of $267 million to investors harmed by fraudulent market timing in the PBHG Funds between June 1998 and December 2001
Pilgrim Baxter & Associates, Ltd. was the investment adviser to the PBHG Funds during this period
Today's $69 million distribution is the third and final in a series of Fair Fund disbursements to more than 384,000 account holders in the affected PBHG Funds
The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money distributed to harmed investors by allowing civil penalties to be included in Fair Fund distributions
the SEC has distributed more than $2.5 billion through Fair Fund distributions
Investors can obtain additional information about the distribution process, including a copy of the Distribution Plan
the Administrator of the Distribution Plan can be contacted by calling (800) 920-5408
Daniel M. Hawke is Regional Director
Elaine C. Greenberg is Associate Regional Director
Amy J. Greer is Regional Trial Counsel
Catherine E. Pappas is Senior Trial Counsel
SEC Philadelphia Regional Office has (215) 597-3100
Distribution Plan can be accessed at http://www.sec.gov/litigation/admin/2006/34-54812-dp.pdf
Order Approving the Distribution Plan can be accessed at http://www.sec.gov/litigation/admin/2006/34-54812.pdf
Orders Instituting Proceedings against PBA, Pilgrim and Baxter can be accessed at http://www.sec.gov/litigation/admin/33-8506.htm http://www.sec.gov/litigation/admin/33-8505.htm http://www.sec.gov/litigation/admin/ia-2251.htm
Additional Documents and Background can be accessed at http://www.sec.gov/divisions/enforce/claims/pilgrimbaxter.htm http://www.sec.gov/news/press/2007/2007-181.htm
Home | Previous Page can be accessed at http://www.sec.gov
Modified is 09/12/2007

View original SEC press releasesec.gov

Extracted body text (2,089c)

SEC Announces Final Disbursement to Investors From $267 Million Pilgrim Baxter Fair Fund FOR IMMEDIATE RELEASE 2007-181 Washington, D.C., Sept. 12, 2007 - The Securities and Exchange Commission today announced the completion of the distribution of $267 million to investors harmed by fraudulent market timing in the PBHG Funds between June 1998 and December 2001. Pilgrim Baxter & Associates, Ltd. was the investment adviser to the PBHG Funds during this period. Today's $69 million distribution is the third and final in a series of Fair Fund disbursements to more than 384,000 account holders in the affected PBHG Funds. Previous disbursements occurred on April 23, and June 13, 2007. The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money distributed to harmed investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to investors. To date, the SEC has distributed more than $2.5 billion through Fair Fund distributions. Investors can obtain additional information about the distribution process, including a copy of the Distribution Plan, by visiting http://www.pbafairfundsettlements.com or by calling the Administrator of the Distribution Plan at (800) 920-5408. # # # For further information contact: Daniel M. Hawke, Regional Director Elaine C. Greenberg, Associate Regional Director Amy J. Greer, Regional Trial Counsel Catherine E. Pappas, Senior Trial Counsel SEC Philadelphia Regional Office (215) 597-3100 Distribution Plan: http://www.sec.gov/litigation/admin/2006/34-54812-dp.pdf Order Approving the Distribution Plan: http://www.sec.gov/litigation/admin/2006/34-54812.pdf Orders Instituting Proceedings against PBA, Pilgrim and Baxter: http://www.sec.gov/litigation/admin/33-8506.htm http://www.sec.gov/litigation/admin/33-8505.htm http://www.sec.gov/litigation/admin/ia-2251.htm Additional Documents and Background: http://www.sec.gov/divisions/enforce/claims/pilgrimbaxter.htm http://www.sec.gov/news/press/2007/2007-181.htm Home | Previous Page Modified: 09/12/2007