(CN) - Invesco Trust Company will pay $10.27 million to claims it artificially inflated the price of share of one of its investment funds, the Labor Department announced Friday.
According to the government, the Atlanta-based investment management firm operated the Invesco Short-Term Investment Fund, a multi-billion dollar collective fund composed of ERISA plan assets.
The department claimed while doing so Invesco violated Employment Retirement Income Security Act
by undertaking a series of measures to ensure that the fund continued to trade at $1 although the fund's net asset value had fallen below $1 due to losses in the value of the fund's securities holdings.
As an example of how Invesco did this, the department said the firm had an
affiliate enter into a series of support agreements to provide contingent financial support to the fund without adequately informing the fund's investors.
Invesco also retained a portion of the income earned by the fund to increase the its net asset value instead of distributing that income to investors, the government said.
Retaining a portion of the fund's income not only reduced the distributions to plan investors, but also reduced the obligations of Invesco's affiliate under the support agreements.
The department concluded Invesco did not adequately disclose these measures to ERISA plan investors, and that these actions resulted in client losses.
The settlement agreement requires Invesco to regularly disclose to ERISA plan investors the fund's holdings, its actual market value, and the existence of any supporting measures used to bolster the its net asset value. Additionally, Invesco must restore client losses that resulted from the fund's retention of income.