The U.S. Securities and Exchange Commission today announced that yet another fund company will settle market timing and late trading charges.

The SEC reported that Fred Alger Management Inc. and Fred Alger & Company Inc. will pay US$40 million to settle the commission’s charges that the companies allowed market timing and late trading in the Alger Fund. The commission issued an order that found Alger Management and Alger Inc. failed to disclose these arrangements to the Board of Trustees of the Alger Fund.

Without admitting or denying the commission’s charges, the companies agreed to pay US$30 million in disgorgement of ill-gotten gains and a US$10 million penalty, all of which will be used to compensate investors. Alger also agreed to retain an independent compliance consultant to review various policies and procedures

The order finds that from at least 2000 through October 2003, Alger Inc. permitted select investors to market time the Alger Fund, and in 2002, Alger Inc. began to demand that market timers make a 20% sticky asset investment in exchange for timing capacity. Alger Inc. also permitted at least one investor to late trade the Alger Fund.

Mark Schonfeld, director of the SEC’s Northeast Regional Office, said, “Alger breached its fiduciary duties when it allowed harmful market timing in exchange for the additional management and other fees generated by the timers’ money. In particular, Alger affirmatively attempted to lure timers to its funds by permitting them to time if they agreed to make a sticky asset investment.”