Amvescap to pay up over 'fraud'

CITY investment firm Amvescap has admitted some clients lost money due to market timing abuses at its US unit, Invesco Funds Group, and has promised to make good any losses.

The company, seeking a settlement with US authorities, said in a statement that procedures designed to protect shareholders from such trading practices 'were not completely effective'.

Investors harmed would get 'full restitution' and an external auditor would evaluate protection systems in future.

Market timing, a short-term trading technique prohibited by many funds, has cost shareholders billions, according to New York Attorney General Elliot Spitzer. He and financial watchdog the Securities and Exchange Commission last month charged Invesco and chief executive Raymond Cunningham with civil fraud for allowing some customers to do such trades.

It is alleged wealthy clients were singled out to benefit from the practice at the expense of others. Invesco says it subsequently ended relationships with 400 large shareholders said to be involved.

Spitzer wants Invesco, which manages about $18bn (£9.8bn) in assets, to return $160m (£87m) in fees from investors and pay unspecified civil penalties. He and officials from California and North Carolina say they will announce a major new initiative to protect investors from mutual fund abuses.