Pimco To Pay $20 Million To Settle SEC Charges It Misled Investors About ETF Performance

The Securities and Exchange Commission said Thursday that Pimco would pay $20 million to settle charges that it misled investors about the performance of the Pimco Total Return Active ETF . The SEC said that for the first four months that the exchange-traded fund traded, it outperformed its flagship mutual fund through an "odd lot" strategy, where the company bought smaller-sized bonds to boost performance. This strategy resulted in the ETF overvaluing its portfolio, while the SEC also said that Pimco didn't disclose this practice as unsustainable as the fund grew in size. "PIMCO misled investors about the true long-term impact of its odd lot strategy and denied them the opportunity to make fully informed investment decisions about the Total Return ETF," Andrew J. Ceresney, director of the SEC's enforcement division, said in a statement. Under terms of the settlement, Pimco agreed to censure under the SEC's order without admitting to or denying the findings.

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