Pimco says SEC probing its Total Return Exchange-Traded Fund

August 05 01:08 2015

The Securities and Exchange Commission’s staff has recommended filing a civil action against Pacific Investment Management Company’s Total Return Active Exchange-Traded Fund (BOND), the bond investment giant said Monday night.SEC Porn

The SEC issued a so-called Wells notice signaling the recommendation focuses on valuation of smaller positions in mortgage-backed securities not backed by government guarantees that Pimco’s flagship fund purchased between the fund’s inception on Feb. 29, 2012, and June 30, 2012, Pimco said. The SEC is also investigating the fund’s performance disclosures for that period and its compliance policies and procedures, the company said.

The $2.48 billion exchange-traded fund has remained relatively popular with small investors, despite redemptions from Pimco’s Total Return mutual fund since last year’s departure of veteran manager Bill Gross. The SEC issues Wells’ notices after a staff investigation has found sufficient evidence to support a civil lawsuit. The notice does not represent a formal allegation or finding of wrongdoing or legal violations.

The SEC declined to comment. The investigation began with investigators from the SEC’s enforcement division examining whether the exchange-traded fund bought investments at discounted prices, but afterward used higher valuations for when calculating the value of the holdings, The Wall Street Journalreported in September. The fund achieved a 20% return between March 1, 2012 and last week, and advanced 1.7% so far this year.