Columbia Management Advisors, Inc. and Columbia Funds Distributor, Inc.
On November 28, 2007, the SEC directed the disbursement of approximately $35 million to investors who were harmed by fraudulent mutual fund market timing in the Columbia Funds between 1998 and 2003. This is the third in a series of disbursements from the Fair Fund that will distribute a total of approximately $140 million to more than 600,000 affected Columbia Funds account holders. Investors can obtain additional information about the distribution process, including a copy of the Distribution Plan, by visiting the Columbia Fair Fund Settlement website or by calling the Fund Administrator at (800) 410-5361.
Litigation and Plan of Distribution
On February 9, 2005, the SEC instituted administrative and cease-and-desist proceedings against Columbia Management Advisors, Inc. and Columbia Funds Distributor, Inc. The SEC alleged that the respondents improperly entered into agreements with favored investors enabling them to conduct short-term trading (known as "market timing") in Columbia mutual funds and failed to disclose those arrangements to other investors in the funds.
As part of the settlement, the respondents must pay $140 million, consisting of $70 million in disgorgement of ill-gotten gains and $70 million in civil penalties for distribution to the mutual funds and shareholders harmed as a result of the market timing. For more information on the SEC's action, you can read In the Matter of Columbia Management Advisors, Inc. and Columbia Funds Distributor, Inc., Release No. 33-8534 (Feb. 9, 2005).
Under the terms of the SECís order, an independent distribution consultant submitted a distribution plan to the SEC. On July 19, 2006, the SEC published a Notice of Proposed Distribution Plan and Opportunity for Comment in connection with this matter. On April 6, 2007, the SEC approved the plan. You can read the SEC's Order Approving a Distribution Plan.