U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19724 / June 13, 2006

SEC v. Stephen J. Treadway and Kenneth W. Corba, Civil Action No. 04 CIV. 3464 (VM) (S.D.N.Y.)

SEC Settles Fraud Action Against Former CEO of Sub-Adviser to Pimco Equity Funds for Undisclosed Market Timing Arrangement

The Securities and Exchange Commission today announced that Kenneth W. Corba, the former chief executive officer of PEA Capital LLC, agreed to settle the SEC's civil fraud charges against him for defrauding PIMCO equity mutual fund investors in connection with an undisclosed market timing arrangement with Canary Capital Partners LLC. From February 2002 to April 2003, Canary Capital engaged in numerous round-trips in an aggregate amount of over $4 billion in several PIMCO funds pursuant to its special market timing arrangement. PEA Capital was the investment sub-adviser for several of the PIMCO equity funds.

To settle the SEC's charges, which were filed in federal court in New York in May 2004, Corba, age 53, of Greenwich, Conn., agreed to pay a $200,000 civil penalty and to be permanently enjoined from future violations of the antifraud provisions of the federal securities laws and from making false statements in mutual fund prospectuses. Corba also consented to an SEC order that bars him from association with any investment adviser, with the right to reapply after one year. Corba consented to the final judgment and SEC order without admitting or denying the allegations.

The Commission's complaint alleged that Corba negotiated and approved an arrangement in which the PIMCO funds' advisers provided "timing capacity" in their mutual funds to Canary Capital in return for long-term investments in a mutual fund and a hedge fund from which PEA Capital earned management fees. The complaint further alleged that Corba failed to disclose the special Canary arrangement to the investing public in the PIMCO funds' prospectuses. In addition to serving as CEO of PEA Capital, Corba was the portfolio manager for the PIMCO Growth Fund, which provided Canary with $30 million in market timing capacity, and for the PIMCO Select Growth Fund, which received $25 million in long-term investments from Canary.

The SEC's complaint also named as a defendant Stephen J. Treadway, the chairman of the board of trustees of the PIMCO Funds: Multi-Manager Series, as well as CEO of PIMCO Advisors Fund Management LLC and PIMCO Advisors Distributors LLC. The SEC's case against Treadway is set for trial on June 19, 2006 in federal court in Manhattan.

The final judgment against Corba, which is subject to approval by United States District Judge Victor Marrero in the Southern District of New York, permanently enjoins him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and Section 34(b) of the Investment Company Act of 1940.

See the Complaint in this matter.

SEC Complaint in this matter