Sun Life: SEC to Recommend Enforcement
Dec. 08, 2003
BOSTON (AP) _ Sun Life Financial Inc. said Monday that the Boston office of the Securities and Exchange Commission will recommend an enforcement action against one of its subsidiaries, Massachusetts Financial Services Co.
The action will allege that the disclosure in certain of MFS' fund prospectuses concerning market timing was false and misleading, and a breach of fiduciary duty, according to a statement from Sun Life. Market timing is a type of quick, in-and-out trading that is not illegal but restricted by many funds because it skims profits from long-term shareholders.
Sun Life said the SEC notice contains no allegations that any MFS worker was knowingly involved in either late trading or inappropriate personal trading of MFS funds.
Nicholas Thomas, a Sun Life spokesman, said that the problems involve 11 of the 105 funds managed by MFS. The funds were domestic large capitalization stock and high grade bond funds and, until recently, were not monitored on a daily basis for frequent trading.
``Frequent trading seems to have occurred without us being aware of it,'' Thomas said.
He said he did not know when the SEC might take formal action, but MFS is cooperating with the SEC.
A call to the SEC seeking comment was not immediately returned.
MFS, based in Boston, is the 11th largest mutual fund company in the country and is 93 percent owned by Sun Life. It is the latest in a string of fund companies to be accused of improper trading in what has become a fast growing scandal for the $7 trillion fund business.
Ward Smith, lead independent trustee for MFS funds, said the board of trustees had already launched its own investigation into the market timing allegations.
``As trustees, our job is to protect shareholders and we believe our actions to be prudent and in the best interests of the funds,'' Smith said in a statement.
Shares of Sun Life, which is based in Toronto but traded on the New York Stock Exchange, closed down 33 cents at $25 in trading Monday.