Janus, agencies reach accord

DENVER — Janus Capital Group struck a $225 million agreement with regulators Tuesday to settle claims of improper trading practices, the latest deal to emerge from the scandal sweeping the $7 trillion mutual funds industry.

Janus will pay $100 million to investors — $50 million in restitution and $50 million in civil penalties — and reduce the fees it charges investors by $125 million over five years.

The Denver-based company will pay an additional $1.2 million to the Colorado attorney general's office for investor education, future enforcement and attorney's fees. It also will institute measures to create more accountability to prevent future problems, Attorney General Ken Salazar said.

"What we want mutual fund companies to do is make sure they are treating all investors fairly," he said.

Regulators accused Janus of entering into agreements with select investors that permitted them to engage in improper, frequent short-term trading while diluting the returns of other shareholders.

The agreement was reached in principle with regulators in Colorado and New York pending final approval of the Securities and Exchange Commission. An SEC representative declined comment.

Janus said it will take a $59 million charge in the first quarter related to the settlement.

"This is a huge step forward for the firm. We know we still have the two priorities — restoring complete trust and confidence in Janus and delivering performance for our investors — and we're confident we can do that," Janus spokeswoman Shelley Peterson said.

The industry scandal has resulted in criminal charges, subpoenas and scrutiny of dozens of fund companies. Other companies have agreed to settlements ranging from $40 million to $675 million.

Janus was under investigation for market timing — a type of rapid, in-and-out trading that can skim profits from long-term fund shareholders. The practice is legal, but Janus policies discouraged it.

Regulators say companies that officially forbade the practice but made exceptions for certain clients are guilty of fraud.

Janus has acknowledged 10 market timing arrangements, all of which have been ended, and had said it will return to shareholders $31.5 million gained from market timing trading.