Three Former Employees of Invesco Funds Group, Inc. Agree to Settle Charges Relating to Market Timing Abuses

FOR IMMEDIATE RELEASE
2004-123

Washington, D.C., Aug. 31, 2004 - The Securities and Exchange Commission today announced settled enforcement actions against Timothy J. Miller, the former chief investment officer and a portfolio manager for Invesco Funds Group, Inc. (IFG); Thomas A. Kolbe, the former national sales manager of IFG; and Michael D. Legoski, a former assistant vice president in IFG's sales department. The Commission issued orders alleging that Miller, Kolbe and Legoski violated federal securities laws by facilitating widespread market timing trading in certain Invesco funds in contravention of those funds' public disclosures.

The Commission ordered Miller, Kolbe and Legoski to pay $1 in disgorgement each and penalties in the amounts of $150,000, $150,000 and $40,000, respectively. In addition, for their roles in the misconduct, the Commission prohibited Miller, Kolbe and Legoski from associating with an investment adviser or investment company for a period of one year, and further prohibited Miller and Kolbe from serving as an officer or director of an investment adviser or an investment company for three years and two years, respectively. The Commission also barred Legoski from associating with any broker or dealer for a period of one year.

Randall J. Fons, Regional Director of the SEC's Central Regional Office, said, "Those investment advisers and their employees who permit these market timing agreements at the expense of the funds will be punished. The Commission will continue its investigation into market timing practices and aggressively seek sanctions against those who participated in any wrongdoing."

Among other things, the Commission's Orders make the following factual findings.

• From 2001 through July 2003, IFG permitted select investors to make excessive exchanges and redemptions in select Invesco funds. Under some of the market timing agreements, IFG required that the market timers invest "sticky" assets in other Invesco funds. IFG realized additional advisory fees from the assets under management resulting from the timing agreements. However, in the aggregate, the market timing trades made under the agreements were detrimental to the funds' shareholders. By entering into the market timing agreements, IFG breached its fiduciary duty to the funds it managed.
   
• During this same time period, the Invesco funds' prospectuses represented that shareholders could make up to four exchanges out of each fund per twelve-month period. The funds reserved the right to modify the exchange policy if such a modification was determined to be in the "best interests" of the fund. Since IFG's market timing agreements provided for more than the disclosed number of exchanges, and since IFG did not make a "best interests" determination before entering into the timing agreements, the agreements contravened the prospectus disclosures.
   
• In his role as IFG's chief investment officer, Miller was responsible for approving the market timing agreements. Legoski was responsible for policing the funds to identify market timing activities, and he played a significant role in negotiating the agreements IFG made with approved market timers. Kolbe supervised Legoski's activities and was also personally involved in negotiating a market timing agreement for a related offshore fund complex. All three of these individuals knew, or were reckless in not knowing, that the market timing program they facilitated was unlawful.
   

The Commission's Orders find that Miller, Kolbe and Legoski aided and abetted IFG's violations of the Investment Advisers Act of 1940, and that Miller caused IFG's violation of Section 34(b) of the Investment Company Act of 1940. The Orders require each of them to cease and desist from violating or causing future violations of these provisions. Miller, Kolbe and Legoski consented to entry of the Commission's Orders without admitting or denying the findings.

Contact persons:
Amy J. Norwood
Laura M. Metcalfe
(303) 844-1000