MutualFundWire.com: A Consultant Lands Federated In Hot Water

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Thursday, June 2, 2016

A Consultant Lands Federated In Hot Water

The SEC just hit Federated Investors [profile] with a $1.5-million fine, and it's all thanks to a consultant.

J. Christopher Donahue
Federated Investors, Inc.
Chairman, President and Chief Executive Officer

On Friday the regulatory agency unveiled a settlement with the publicly-traded, Pittsburgh-based mutual fund shop. The SEC claims that, between 2001 and 2010, Federated Global Investment Management Corp. used a consultant who, unbeknownst to Federated, served on the boards of four public companies. The penalty is to settle charges that Federated "failed to establish, maintain, and enforce written policies and procedures in connection with FGIMC's use of outside consultants as part of its securities research and analysis services."

Reuters reported on the settlement.

Federated agreed to the cease-and-desist order, according to the SEC, "without admitting or denying the findings."

"There was no finding of any misuse of material nonpublic information," Federated spokeswoman Meghan McAndrew tells Reuters, adding that Federated also addressed the issue before the SEC's investigation.

The consultant in question, unnamed in the SEC's 11-page order, "provided them analysis and buy, sell and hold recommendations with respect to pharmaceutical and biotechnology stocks for consideration" for Federated's Kaufmann Funds. Those three funds now have a combined $8.65 billion in AUM.

Printed from: MFWire.com/story.asp?s=54140

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