Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, September 19, 2007

Evergreen Settles Market-Timing Charges

The SEC announced settled enforcement actions against registered investment adviser Evergreen Investment Management Company (Evergreen), three of its affiliates, and a former officer, alleging that, contrary to prospectus disclosures, they allowed certain shareholders to market time and engage in excessive exchange activity in the Evergreen mutual fund complex.  Evergreen and three affiliates, Evergreen Investment Services, Inc., and Evergreen Service Company, all based in Boston, Mass., and Wachovia Securities, based in Richmond, Va. (the affiliates), will pay $28.5 million in disgorgement and a total of $4 million in civil penalties. William M. Ennis, a former officer of Evergreen who resides in Charleston, S.C., will pay $1 in disgorgement plus a civil penalty of $150,000. The payments will be distributed according to a plan to be developed by an independent distribution consultant under the Fair Fund provisions of the Sarbanes-Oxley Act.

The Commission's Orders find that Evergreen, the affiliates and Ennis entered into an agreement to allow a registered representative of a broker-dealer to market time at Evergreen funds in excess of trading limits set forth in the funds' prospectuses. The Commission's Order as to Evergreen and the affiliates further finds that they generally failed to enforce these limits as to other traders, which resulted in substantial trading activity that imposed costs on the funds and impaired their performance.

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