The Securities and Exchange Commission
has begun proceedings against a former Schroder Investment Management
who was head of municipal bonds and managed the
Schroder Municipal Bond Fund
Schroder Short-Term Municipal Bond Fund
between 2003 and 2008, allegedly engaged in insider trading in September and October 2008.
The SEC claims that Baldt tipped off family members to redeem their shares of the short-term fund, which "several members of Baldt’s family invested the bulk of their life savings in," the SEC administrative document
Because of the market conditions of September and October 2008, Schroder was fearful that it wouldn't meet redemption requests and told Baldt that unless significant cash was raised, the funds would be liquidated. At that point, Brandt told two family members to “go the full route” by selling their shares.
Starting on October 6, three family members began redeeming $50,000 of Short-Term Fund shares a day, the maximum allowed.
Baldt resigned as the funds' portfolio manager on October 14, but stayed at Schroders as a consultant until May 2009.
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