PIMCO charged by the SEC for swaps disclosure and procedures failures

Without admitting or denying the regulator’s findings, PIMCO has agreed to a cease-and-desist order and a censure; will pay a combined penalty of $9 million.

The Securities and Exchange Commission (SEC) has charged Pacific Investment Management Company (PIMCO) $9 million for disclosure, policies and procedures violations involving two funds the firm advises on.

In the first action, the SEC found that between September 2014 to August 2016, PIMCO failed to disclose material information to investors related to PIMCO Global StocksPLUS & Income Fund’s (PGP) use of interest rate swaps and the material impact the swaps had on PGP’s dividend.

The SEC also found, in the second action, that between April 2011 to November 2017, PIMCO failed to waive an estimated $27 million of advisory fees as required by its agreement with the PIMCO All Asset All Authority Fund.

Until at least 2018, the SEC found that PIMCO did not have adequate written policies and procedures related to its oversight of advisory fee calculations and coinciding fee waivers. Around $27 million in fees which were supposed to be waived have since been distributed by PIMCO to investors, in addition to interest and a performance adjustment.

“These cases highlight our continued focus on ensuring that firms adequately disclose material information and implement reasonably designed policies and procedures,” said Corey Schuster, co-chief of the enforcement division’s asset management unit.

“PIMCO failed to comply with both of these critical obligations.” 

PIMCO has agreed to a cease-and-desist order and a censure in both actions – without admitting or denying the SEC’s findings – and will pay a combined penalty of $9 million.