In the Matter of Fred Alger Management, et al.
Admin Proc. File No. 3-12540
On January 18, 2007, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Fred Alger Management, Inc. (“Alger Management”) and Fred Alger & Company, Incorporated (“Alger, Inc.”) (collectively, the “Respondents”). In the Order, the Commission found that, from 2000 to 2002, the Respondents violated the federal securities laws by permitting numerous select investors to market time the Alger Fund Group (“Alger Fund”) in contradiction to representations in the Alger Fund’s prospectus. Additionally, Alger Management failed to disclose that Alger, Inc. had entered into numerous arrangements with select investors, including “sticky asset” arrangements, to permit them to time the Alger Fund.
The Commission ordered, and the Respondents have paid, a total of $40,000,000.00 in disgorgement and civil money penalty to the Commission. The Order provided that the penalty may be distributed, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002. The Order also provided that the Respondents, at their own expense, would retain an Independent Distribution Consultant to distribute the disgorgement and penalty paid (“Distribution Fund”), pursuant to the Order, and any interest or earnings thereon, to harmed investors. See the Commission’s Order: Release No. 34-55118.
On June 8, 2007, the Commission issued an order appointing Damasco & Associates LLP (“Damasco”) as the Tax Administrator of the Distribution Fund. Damasco was acquired by Miller Kaplan Arase LLP and on June 30, 2017, the Commission issued a notice of name change for the Tax Administrator. See the Commission’s Orders: Release Nos. 34-55888 and 34-81064.
On May 5, 2015, the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provided the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-74871 and the Proposed Plan.
On July 23, 2015, the Commission issued an order appointing Rust Consulting, Inc., as the Fund Administrator and set the administrator’s bond amount. See the Commission’s Order: Release No. 34-75515.
On July 24, 2015, the Commission issued an order approving the plan of distribution and published the approved plan of distribution (“Plan”). See the Commission’s Order: Release No. 34-75520 and the Plan.
The Plan provides that the distribution of the Distribution Fund shall be made to Alger Fund accountholders, in order of priority, (a) a proportionate share of losses suffered by Alger Fund portfolios due to market timing and late trading, and (b) a proportionate share of advisory fees paid by Alger Fund portfolios that suffered such losses during the period of such market timing and late trading.
On September 25, 2017, the Commission issued an order approving the disbursement of $18,340,472.97 from the Distribution Fund for distribution to eligible accountholders. See the Commission’s Order: Release No. 34-81698.
On August 23, 2018, the Commission issued an order approving a second disbursement of $6,408,584.59 from the Fair Fund for distribution to eligible accountholders in accordance with the Plan. See the Commission’s order: Release No. 34-83915.
On May 6, 2019, the Commission issued a third order directing the disbursement of $6,849,725.63 from the Fair Fund to the Fund Administrator for distribution to harmed investors in accordance with the Amended Plan. See the Commission’s Order: Release No. 34-85791.
On September 23, 2021, the Commission issued an order approving the disbursement of $13,423,323.52 from the Fair Fund for distribution to eligible investors. See the Commission’s Order: Release No. 34-93109 .
For more information, please contact the Fund Administrator:
Rust Consulting, Inc.
Telephone Number: 888-558-4718