Justice tends to be far from swift when it comes to market-timing fraud. The Securities and Exchange Commission announced this week that it is returning ill-gotten gains to Pilgrim Baxter (investment advisor to the PBHG fund family) shareholders, three and half years after the fund company was engulfed in a trading scandal. Not only has it taken a long time, but investors are getting their money back in bits and pieces.
The SEC said Wednesday that shareholders will receive a $73 million reimbursement, representing the second installment in a series of three payments as part of its settlement with regulators. The refund comes out of the Pilgrim Baxter fair fund, which holds $267 million in funds set aside to repay the 384,000 investors who were shortchanged by market timing in the PBHG Funds between June 1998 and December 2001.
In April, shareholders received $125 million in remuneration. The SEC estimates that the third disbursement will be made before Sept. 30. To date, the SEC has distributed more than $1.8 billion in so-called fair funds to investors.
Pilgrim Baxter fund shareholders are getting, on average, about $695 apiece. Not a lot of dosh considering the portfolio managers—Gary Pilgrim and Harold Baxter—were trading in their own accounts and making themselves rich while they bilked shareholders.
For more on the rise and fall of Pilgrim Baxter, check out CNN’s coverage.