4.17.2009 The SEC in an administrative action found that American Skandia Investment Services, Inc. (ASISI) engaged in market-timing related misconduct as investment adviser to the American Skandia Trust (AST) portfolios underlying variable annuities issued by American Skandia Life Assurance Corporation (ASLAC). As a result of its misconduct, ASISI will pay disgorgement of $34 million and a civil penalty of $34 million for a total payment of $68 million to a Fair Fund. ASISI is based in Shelton, Connecticut, and is registered with the SEC as an investment adviser.
The Order finds that from at least January 2000 through in or around September 2003, ASISI negligently failed to consider and adequately investigate credible complaints from sub-advisers of certain AST funds that market timing was having a detrimental effect on the performance of the funds. In doing so, ASISI negligently failed to inform the AST Board of Trustees of significant information concerning market timing and its potential effects. As a result, the AST Board of Trustees had insufficient information regarding the potential causes of the sub-advisers' investment results in certain of the AST sub-accounts, and ASISI's implementation of its own market-timing policies and procedures. In addition, the AST Board lacked adequate information to consider whether the sub-accounts had adequate policies and procedures in place with respect to market timing.
The SEC ordered ASISI to pay disgorgement of ill-gotten gains in the amount of $34 million and civil monetary penalties of $34 million. ASISI has undertaken to undergo a compliance review by a third party by no later than 2009.
Click http://www.sec.gov/litigation/admin/2009/ia-2867.pdf to access the administrative action.