(by Arthur Headner)

PA Fund Management (formerly Pimco Equity Funds) and its distributor are fined within $50 million for civil fraud over secret deals struck with the Canary hedge fund to allow improper trading in the mutual funds.

Recently, SEC said that PA Fund Management, its sub-adviser PEA Capital, and distribution arm PA Distributors are to pay as much as $40 million penalty, disgorge $10m in profits and enact various compliance reforms as part of the settlement.

In the period of February 2002 to April 2003, the funds allowed Canary Capital with $60m in market timing capacity, in exchange for Canary depositing $27m in long term investments with them, SEC added. As a result, they got around $4 billion of turnover.

Pimco declined to comment.