PIMCO Settles $600M Treasury Manipulation Suit for $92M
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Bond giant Pacific Investment Management Company (PIMCO) has settled a suit today alleging that they money manager manipulated the price of some treasuries for financial gain.
PIMCO, which oversees $1.2 trillion in assets, agreed to pay $92 million to settle the charges.
The original filing came in 2005 by investors Josef Kohen and Richard Hershey and Breakwater Trading LLC, which accused PIMCO of cornering the market on 10-year Notes in May and June of 2005 on the Chicago Board of Trade.
$600 million in damages were sought by the lawsuit.
The plaintiffs said that PIMCO bought 10-year T-Note futures contracts while owning the underlying security at the same time. As Bloomberg reports, instead of selling early, PIMCO held until maturity to create artificial scarcity, which caused losses for "investors who had to buy June 2005 contracts at inflated prices to cover their "short" positions."
PIMCO, which oversees $1.2 trillion in assets, agreed to pay $92 million to settle the charges.
The original filing came in 2005 by investors Josef Kohen and Richard Hershey and Breakwater Trading LLC, which accused PIMCO of cornering the market on 10-year Notes in May and June of 2005 on the Chicago Board of Trade.
$600 million in damages were sought by the lawsuit.
The plaintiffs said that PIMCO bought 10-year T-Note futures contracts while owning the underlying security at the same time. As Bloomberg reports, instead of selling early, PIMCO held until maturity to create artificial scarcity, which caused losses for "investors who had to buy June 2005 contracts at inflated prices to cover their "short" positions."
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