Pimco received a Wells Notice from the SEC over its Total Return Active Exchange Traded Fund.
The SEC is considering legal action against the firm in regards to the value of positions in non-agency mortgage-backed securities from 2012, reports CNBC. Bill Gross, who left Pimco last September, was managing the fund at the time. It currently sports a 5-star rating from Morningstar and had $2.6 billion in assets in May, down from $3.6 billion when Gross was still at the helm.
Pimco released a statement, saying: “The Wells process provides us with our opportunity to demonstrate to the SEC staff why we believe our conduct was appropriate, in keeping with industry standards, and that no action should be taken. We will continue to engage with the SEC and we are confident that this matter will not affect our ability to serve our clients.”
According to a story last September in the Wall Street Journal, the SEC was looking into non-agency mortgage-backed securities that the ETF had bought at a discount and then marked in the portfolio to its full value. The Journal wrote:
One possible focus of the SEC inquiry, according to people familiar with the matter: whether Pimco’s alleged maneuver meant investors were given inaccurate information about the fund’s performance. It is a breach of securities law to provide investors with misleading information about values or performance, even if the wrong information was supplied unintentionally.
Photo: Janus