Securities Law Prof Blog

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

Thursday, June 12, 2008

SEC Institutes Market Timing Charges Against Invesco Funds Salesperson

The SEC issued an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Section 203(f) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940 (Order) against Michael K. Brugman (Respondent). The Order alleges that from mid-2001 through December 2002, Respondent, who was at that time a securities salesman for Invesco Funds Group, Inc. (IFG), accepted personal payments totaling over $3 million from various entities in exchange for procuring market timing capacity within the Invesco funds. The Order further alleges that Respondent never disclosed these payments to IFG even though, as IFG’s agent and fiduciary and pursuant to a written agreement Respondent had with IFG, he had a duty to do so. As a result of this conduct, the Order alleges that Respondent willfully violated Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder.  A hearing will be held by an Administrative Law Judge to determine whether the allegations contained in the Order are true, to provide the Respondent an opportunity to dispute these allegations, and to determine what, if any, remedial sanctions are appropriate and in the public interest. The Order requires the Administrative Law Judge to issue an initial decision no later than 300 days from the date of service of the Order, pursuant to Rule 360(a)(2) of the Commission’s Rules of Practice.

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