Mario Gabelli said Thursday that his eponymously named firm would pay it first dividend to shareholders on record on December 1. His positive news came one day after Gabelli circulated a letter stating that Gabelli officials found no evidence of improper trading at the Rye, New York-based fund firm.

The dividend will be a $0.02 per share payment to Class A stockholders. Class B shareholders waived their dividend, according to Gabelli.

Gabelli said that his firm received information requests from New York Attorney General's Office (NYAG) on October 7 and an earlier request from the Securities and Exchange Commission for information relating to the firm's practices regarding the purchase, sale and valuation of mutual fund shares. He said that both were part of the industry-wide examination focused primarily on late trading and time zone arbitrage.

Gabelli pointed out the firm added two percent redemption fees to its international funds and increased the required holding period of funds to 60 days well before the scandal hit the papers.

"Since our firm was founded in 1977, we have taken numerous steps to protect the assets entrusted to us by clients. We are aggressively continuing this effort by re-examining our procedures and policies to determine what additional steps we can take to further protect the best interests of all our stakeholders," wrote Gabelli to shareholders.

He added that the firm's review is ongoing, but that so far it has discovered no evidence of improper practices. Gabelli summarized the findings as follows:

It found no arrangements to permit illegal "late trading" in any Gabelli mutual funds.

It found no fund portfolio manager who engaged in any improper short-term trading or taken advantage of stale prices in their funds' shares.

It found no senior executives who engaged in improper trading in Gabelli funds' shares. Gabelli has asked for all senior executives in its mutual funds subsidiary and in its publicly traded holding company to certify to these facts.

It received verification by outside counsel for our funds, namely Skadden, Arps, Slate, Meagher & Flom; Wilkie Farr & Gallagher and Paul Hastings, that its funds' prospectuses are silent on the subject of short-term trading in its funds' shares.

It was approached by an investment advisor who it believes is part of a broader inquiry. This organization purchased one of our hedge fund products on August 1, 2003, and redeemed on October 31, 2003. This organization did not invest in any of its mutual funds or other products.

In August 2002, it banned an account, which had been engaging in short term trading in our Global Growth Fund and which had subsequently made a small investment in one of our hedge funds, from further transactions with our firm. Certain other investors had been banned prior to that.

It is enhancing the firm's code of ethics to include the reporting of all mutual fund share transactions by employees, including non-Gabelli mutual funds.  

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