Amvescap pays $325m to settle US inquiry

Invesco, the fund manager owned by the Anglo-American giant Amvescap, yesterday agreed one of the largest settlements with US regulators for controversial trading practices, handing over $325m (£183m) to bring an end to an investigation into alleged market timing practices.

Invesco, the fund manager owned by the Anglo-American giant Amvescap, yesterday agreed one of the largest settlements with US regulators for controversial trading practices, handing over $325m (£183m) to bring an end to an investigation into alleged market timing practices.

Invesco's sister company, AIM Advisors, will make an additional payment of $50m as part of the settlement with Denver's attorney general, who has led the investigation.

Regulators across the US have been investigating financial companies over the past year, looking at the practice of some fund managers to engage in "market timing". While not illegal, the process allows sophisticated short-term investors such as hedge funds to make money from small movements in prices, while disadvantaging long-term investors, who tend to be private individuals.

As part of the settlement, Invesco and AIM Advisors will also reduce fees charged to investors by $75m over a five-year period.

Ken Salazar, the attorney general, said the penalty being paid by Invesco was one of the largest settlements yet in the market-timing scandal that has swept the $7 trillion mutual funds industry in the US.

"I believe this sends the strongest message yet that mutual fund companies will be held accountable for behaviour that harms consumers and average shareholders," Mr Salazar said.

While most examples of market timing to have been discovered have originated in the US, the Financial Services Authority also launched an investigation into the practices of UK fund managers. However, it said earlier this year that it did not believe the problem was significant in the UK.

Since September 2003, a number of American mutual fund companies have been accused of market timing. So far, more than a dozen companies have been implicated in the mutual fund scandal.

In the past 12 months, several major fund managers including Alliance Capital Management, Janus Capital Group and Bank of America, have paid hundreds of millions of dollars to settle improper trading charges.