Federated Investors Inc. announced a $7.6 million fund to reimburse investors for improper trading in its mutual funds and said Tuesday it was sanctioning two money managers and two officers involved in such trading.
The company also said it fired one employee who placed orders after markets closed, and said it would take a $20 million charge to cover the reimbursement fund and related costs.
The Pittsburgh investment management company said a review found that during the past five years orders incorrectly accepted by Federated employees amounted to no more than a fraction of 1 percent of all orders they processed.
These incorrectly accepted orders had no material impact on the funds, Federated said. The company has hired KPMG as an independent auditor to conduct a review of its internal audit and compliance functions.
The company said it was sanctioning two officers who permitted frequent trading by a hedge fund investor that was reported Nov. 25 when Federated announced a group of employees had accepted after-hours trades. Two portfolio managers also were sanctioned, it said.
