Zurich Capital Markets

Bellevue, WA: (May-07-07) The US Securities and Exchange Commission brought charges against Zurich Capital Markets (ZMC), a unit of Zurich Financial Services, accusing it of helping four market-timing hedge funds that defrauded mutual funds. The suit claimed that in order to buy, exchange and redeem shares in these mutual funds, these hedge funds employed deceptive techniques designed to avoid detection by these mutual funds. ZCM came to learn that the hedge funds were utilizing deceptive practices to market-time mutual funds, and nonetheless ZCM provided financing to them and took administrative steps that substantially assisted them. The SEC said ZCM generated about $11 million in profit in the period 1999-2003 from providing financing to the four hedge fund clients. In a settlement reached, Zurich Capital Markets agreed to pay $16.8 million in fines, interest and profit to settle SEC accusations. The money will be distributed to the mutual funds that were harmed by ZCM's actions. [REUTERS: ZURICH SECURITIES]

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Published on May-9-07