Janus Shells Out $18 Million, on SEC Orders

Financial

Janus Shells Out $18 Million, on SEC Orders

Janus Capital Management, an investment advisor to Janus Mutual Funds, reimbursed $18 million to more than 325,000 defrauded shareholders late last week as a first step in paying back more than $100 million, as ordered by the Securities and Exchange Commission.

In August of 2004, the SEC found that Janus Capital entered into market timing agreements with 12 entities, and failed to notify its shareholders. Market timing is a strategy where investors buy and sell frequently to try and profit from short-term market cycles.

The agreements permitted the 12 entities to perform more than the commonly allowed four transactions per year, without paying redemption fees. Since waiving these fees imposes the administrative and transaction costs of frequent trading on all the shareholders, Janus Capital had a conflict of interests with Janus Mutual Funds which it failed to disclose to the Board of Trustees.

The SEC censured Janus Capital and ordered it to pay $50 million dollars in disgorgement and $50 million in civil penalties, in addition to interest earned on the money since 2004, totaling more than $100 million.

Shareholders are to be reimbursed for their share of losses due to market timing, and for their share of advisory fees paid by funds that suffered losses during the period of the market timing. To distribute the money to the shareholders in the five affected mutual funds, Janus Capital hired Christopher M. James, an independent distribution consultant.

After a lengthy process of planning and discussion, James started the distribution process that will continue over the coming months.

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Texas Adopts Statewide Texting-While-Driving Ban

Effective September 1, 2017, Texas will become the 47th state to pass a statewide ban on texting while driving. Governor Abbott’s signing of House Bill 62 is an effort to unify Texas under a uniform ban and remedy the “patchwork quilt of regulations that dictate driving practices in Texas.”

The bill specifically prohibits drivers from reading, writing, or sending an electronic message on a device unless the vehicle is stopped. That includes texting and emailing. It does not, however, prohibit dialing a number to call someone, talking on the phone using a hands-free device, or using the phone’s GPS system.

Violations would be punishable by a fine ranging from $25 to $99, to be set by each municipality. Although penalties could rise to as much as $200 for repeat offenders.

Studies have found that a driver’s reaction time is half as much when a driver is distracted by sending or reading a text message. According to state officials, in 2015 more than 105,000 traffic accidents in Texas involved distracted driving, leading to at least 476 fatalities.