Published On: Thu, Aug 6th, 2015

Lawsuit on the Horizon for Pimco Total Return ETF (BOND)

In 2012, Pimco’s exchange-traded version of its flagship Total Return Fund was one of the most highly anticipated and most successful launches in the industry. The fund – (BOND B+) – raked in over $3.8 billion in assets in its first nine months of trading as investors piled in to gain access to the “Bond King” Bill Gross’ expertise.



BOND’s wild success quickly turned sour after Bill Gross announced his departure from Pimco in September of 2014. Just a few days before his announcement, however, the fund had already come under fire after the Securities and Exchange Commission announced its investigation into whether or not the fund had artificially boosted returns. Not surprisingly, BOND began to hemorrhage, losing over $1.1 billion in assets in less than a month.

Fast forward almost one year later, Pimco revealed on Monday that it has received a “Wells notice” from the SEC, meaning the firm will likely soon be slapped with a civil action lawsuit. The investigation centers around a four-month time period between February 29, 2012 and June 30, 2012, and how the firm valued some of its small positions in non-agency, mortgage-backed securities (MBS).

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ETF db by Daniela Pylypczak-Wasylyszyn

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