UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 50289 / August 30, 2004

INVESTMENT ADVISERS ACT OF 1940
Release No. 2290 / August 30, 2004

INVESTMENT COMPANY ACT OF 1940
Release No. 26590 / August 30, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11620


In the Matter of

MICHAEL D. LEGOSKI,

Respondent.


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ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER PURSUANT TO SECTION 15(b)(6) OF THE SECURITIES EXCHANGE ACT OF 1934, SECTIONS 203(f) AND 203(k) OF THE INVESTMENT ADVISERS ACT OF 1940, AND SECTION 9(b) OF THE INVESTMENT COMPANY ACT OF 1940

I.

The Securities and Exchange Commission ("Commission") deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934 ("Exchange Act"), Sections 203(f) and 203(k) of the Investment Advisers Act of 1940 ("Advisers Act"), and Section 9(b) of the Investment Company Act of 1940 ("Investment Company Act") against Michael D. Legoski ("Respondent" or "Legoski").

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Section 15(b)(6) of the Securities Exchange Act of 1934, Sections 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940 ("Order"), as set forth below.

III.

On the basis of this Order and Respondent's Offer, the Commission finds1 that:

Overview

A. This is a proceeding against Michael D. Legoski, a former employee of Invesco Funds Group, Inc. ("IFG"), a registered investment adviser to the Invesco mutual fund complex (the "Invesco Funds" or "Funds"), based on his role in assisting IFG in negotiating market timing agreements from 2001 through July 2003 (the "relevant time period"). By entering into these agreements IFG breached its fiduciary duty to the Funds. The agreements also contravened the Funds' prospectus disclosures.

B. Market timing includes (a) frequent buying and selling of shares of the same mutual fund or (b) buying or selling mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Market timing, while not illegal per se, can harm other mutual fund shareholders because it can dilute the value of their shares, if the market timer is exploiting pricing inefficiencies, or disrupt the management of the mutual fund's investment portfolio and can cause the targeted mutual fund to incur costs borne by other shareholders to accommodate frequent buying and selling of shares by the market timer.

C. Under the market timing agreements, IFG, through Legoski and others, permitted certain select investors ("Market Timers") to make excessive exchanges and redemptions totaling approximately $58 billion in select Invesco Funds. IFG required, either expressly or tacitly, the Market Timers' investment of "sticky assets" in Invesco Funds (i.e., long-term money that would remain in a particular fund without being actively traded) under some of the agreements.

D. The market timing agreements financially benefited IFG in that IFG realized additional advisory fees from the timed Funds and sticky assets under its management. Because IFG had reason to believe that the assets brought to the Funds under the market timing agreements, while serving to increase IFG's advisory fees, could be traded in a manner detrimental to the Funds, IFG had a conflict of interest with the Funds. IFG failed to disclose the conflict of interest to the board of directors of the Funds or to the Fund shareholders and obtain the board members' consent to the agreements, thereby breaching IFG's fiduciary duty to the Funds.

E. The market timing agreements were also inconsistent with the disclosures made in the Funds' prospectuses. The prospectuses stated that shareholders could make up to four exchanges out of each Fund per twelve-month period. The market timing agreements provided for more than the disclosed number of exchanges. Furthermore, while the prospectuses also disclosed that each Fund reserved the right to modify the exchange policy if such a modification was determined to be in the best interests of the Fund, IFG failed to make a determination that each proposed market timing agreement was in the best interest of the Fund before entering into the agreement. In the aggregate, the market timing trades made under the agreements were detrimental to the Funds' shareholders for the reasons set forth in paragraph B above.

Respondent

F. Legoski was an assistant vice president in the sales department of IFG from approximately August 1994 through September 2003. Legoski also has been an associated person of Invesco Distributors, Inc., a broker-dealer registered with the Commission, from 1986 through March 31, 2004. Legoski, 47 years old, is a resident of Conifer, Colorado.

Other Related Entities

G. IFG, a Delaware corporation with headquarters in Denver, Colorado, and its predecessors have been registered with the Commission as an investment adviser since 1957. Since February of 1997, IFG has been a wholly-owned subsidiary of AMVESCAP PLC, a public company headquartered in London, England. During the relevant time period, IFG served as an investment adviser to eight registered open-ended investment companies, consisting of over forty-five series (each of which is functionally a separate investment company). On December 2, 2003, the Commission filed an action against IFG and its former chief executive officer in federal district court in connection with the matters described herein. SEC v. IFG et al., Civil Action No. 03-N-2421 (PAC).

Facts

Legoski's Role in Policing Market Timing Activities and Negotiating Agreements with Market Timers

H. During the relevant time period, Legoski managed what was known as IFG's "market timing desk" and was responsible for policing the Funds to identify market timing or frequent trading activities. In this position, Legoski played a significant role in negotiating IFG's agreements with Market Timers.

I. In considering a potential agreement with a Market Timer, Legoski had primary responsibility for obtaining information from the Market Timer about its proposed frequent trading model, and then communicating that information to others at IFG. If a Market Timer was approved for trading within the Invesco Funds, Legoski then communicated the resulting agreement, directly or through others, to the Market Timer and occasionally monitored its trading activities. Legoski negotiated the market timing agreements orally or through email communications, but the agreements were never formally reduced to writing.

J. With all Market Timers, Legoski communicated IFG's requirement that they keep their timed monies within the Invesco fund complex when exchanging out of a Fund approved for timing. With some Market Timers, Legoski also communicated the additional requirement that they maintain sticky assets within the Invesco fund complex in exchange for their ability to engage in frequent trading.

K. Legoski knew, or was reckless in not knowing, that the assets brought to the Funds under the market timing agreements, while serving to increase IFG's advisory fees, could be traded in a manner detrimental to the Funds. This placed IFG in a conflict of interest situation with the Funds that was not disclosed to the Funds' board of directors or shareholders and through which IFG breached its fiduciary duty to the Funds.

The Funds' Prospectuses Prohibited Market Timing and Frequent Trading in Invesco's Mutual Funds at the Same Time IFG Allowed Investors to Market Time the Funds

L. During the same period that IFG entered into agreements with Market Timers, the prospectuses for the Funds represented that IFG discouraged frequent trading by investors by attempting to limit the number of exchanges a shareholder could make in each Fund. To that end, these prospectuses disclosed that shareholders could "make up to four exchanges out of each Fund per twelve-month period." The prospectuses further disclosed that "[e]ach Fund reserves the right to reject any exchange request, or to modify or terminate the exchange policy, if it is in the best interests of the Fund."

M. Throughout the relevant time period, IFG provided these prospectuses to shareholders and prospective shareholders in the Funds. IFG also included the prospectuses in registration statements for the Funds filed with the Commission.

N. Legoski knew, or was reckless in not knowing, that IFG's agreements with Market Timers were inconsistent with the Funds' prospectus disclosure and were detrimental to the Funds.

Violations

O As a result of the above-described conduct, Legoski willfully aided and abetted and caused IFG's violations of Section 206(1) and (2) of the Advisers Act.

Undertakings

P. Respondent undertakes to cooperate fully with the Commission in any and all investigations, litigations or other proceedings brought by the Commission relating to or arising from the matters described in the Order, and agrees:

1. To comply with any and all reasonable requests by the Commission's staff for documents or other information;

2. To be interviewed at such times as the Commission's staff reasonably may direct;

3. To appear and testify in such investigations, depositions, hearings or trials as the Commission's staff reasonably may direct; and

4. That in connection with any (i) testimony of Respondent to be conducted by testimony session, deposition, hearing or trial, or (ii) requests for documents or other information, that any notice or subpoena for such may be addressed to Respondent's counsel, and be served by mail or facsimile.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondent Legoski's Offer.

Accordingly, it is hereby ORDERED:

A. Pursuant to Section 203(k) of the Advisers Act, that Respondent Legoski cease and desist from committing or causing any violations and any future violations of Sections 206(1) and 206(2) of the Advisers Act.

B. Pursuant to Section 15(b)(6) of the Exchange Act, Section 203(f) of the Advisers Act, and Section 9(b) of the Investment Company Act, Respondent Legoski be, and hereby is, barred from association with any broker, dealer, or investment adviser, and is prohibited from serving or acting as an employee, officer, director, member of an advisory board, investment adviser or depositor of, or principal underwriter for, a registered investment company or affiliated person of such investment adviser, depositor, or principal underwriter, with a right to reapply for association after one (1) year from the date of the Order to the appropriate self-regulatory organization, or if there is none, to the Commission. Any reapplication for association by Legoski will be subject to the applicable laws and regulations governing the reentry process, and reentry may be conditioned upon a number of factors, including, but not limited to, the satisfaction of any or all of the following: (a) any disgorgement ordered against Legoski, whether or not the Commission has fully or partially waived payment of such disgorgement; (b) any arbitration award related to the conduct that served as the basis for the Commission order; (c) any self-regulatory organization arbitration award to a customer, whether or not related to the conduct that served as the basis for the Commission order; and (d) any restitution order by a self-regulatory organization, whether or not related to the conduct that served as the basis for the Commission order.

C. Respondent shall, upon entry of the Order, pay a civil penalty in the amount of $40,000 and disgorgement in the amount of $1 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Office of Financial Management, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (D) submitted under cover letter that identifies Michael D. Legoski as a Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Randall J. Fons, Regional Director, Securities and Exchange Commission, 1801 California Street, Suite 1500, Denver, Colorado, 80202. Such civil money penalty may be distributed pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 ("Fair Fund distribution"). Regardless of whether any such Fair Fund distribution is made, amounts ordered to be paid as civil money penalties pursuant to this Order shall be treated as penalties paid to the government for all purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, Respondent agrees that he shall not, in any Related Investor Action, benefit from any offset or reduction of any investor's claim by the amount of any Fair Fund distribution to such investor in this proceeding that is proportionately attributable to the civil penalty paid by Respondent ("Penalty Offset"). If the court in any Related Investor Action grants such an offset or reduction, Respondent agrees that he shall, within 30 days after entry of a final order granting the offset or reduction, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to the United States Treasury or to a Fair Fund, as the Commission directs. Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed against Respondent in this proceeding. For purposes of this paragraph, a "Related Investor Action" means a private damages action brought against Respondent by or on behalf of one or more investors based on substantially the same facts as alleged in the Order in this proceeding.

By the Commission.

Jonathan G. Katz
Secretary

1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.