Amvescap tries to block run on funds

BRITISH fund manager Amvescap has been hit with a shareholder lawsuit, sparking fears that it could face a run on its funds.

The lawsuit comes on top of charges filed in America last week by the US Securities & Exchange Commission and New York State attorney general Eliot Spitzer.

These allege that the firm's Invesco subsidiary allowed traders to rack up illicit profits at the expense of other investors in the 'market timing' scandal.

Market timing enables professionals to use market techniques to trade more quickly than private investors.

The new lawsuit - the first of what could be a string of claims - was filed by heavyweight law firm Milberg Weiss on behalf of investors in more than 40 Invesco funds.

Amvescap, which has £190bn under management worldwide, said it would 'vigorously' contest all allegations.

Executives also said that they were trying to reassure major clients and head off withdrawals.

But the states of Massachusetts and Connecticut disclosed that they were considering punishing Amvescap by withdrawing their money.

Amvescap manages a real estate investment trust of undisclosed size for Massachusetts and oversees £160m in an international equities fund for Connecticut.

A Connecticut spokesman said: 'We're requesting more information about the charges and reviewing our options.'