On January 20, 2010, the SEC filed a settled enforcement action charging Charles J. Marquardt with insider trading in the Evergreen Ultra Short Opportunities Fund, a mutual fund that invested primarily in mortgage-backed securities. At the time of his trading, Mr. Marquardt was the Senior Vice President and Chief Administrative Officer for operations of Evergreen Investment Management Company, LLC, the investment adviser to the fund.
The SEC’s complaint alleged that, on June 11, 2008, Mr. Marquardt learned that the fund might soon reduce the value it assigned to several of its mortgage-backed securities holdings, a move that would likely decrease the fund’s net asset value and might cause the fund to close. The SEC’s complaint further alleged that, on the next day, Mr. Marquardt and another family member redeemed all of their fund shares. Over the next several days, the fund did, in fact, decrease the value it assigned to its holdings, triggering significant reductions of the fund’s NAV. On June 19, 2008, Evergreen publicly announced that the fund would be liquidated. The SEC’s complaint alleges that, by redeeming their fund shares prior to the announcement of the liquidation of the fund, Mr. Marquardt and his family member avoided losses of approximately $4,803 and $14,304, respectively. Mr. Marquardt agreed to pay $19,107 in disgorgement, representing the losses that he and his family member avoided, $1,242 in prejudgment interest and a $19,107 civil penalty.