MFS Deserves Credit for Reforms
We're upgrading our investment opinion on the firm.
In the two months since MFS settled market-timing and late-trading charges with the Securities and Exchange Commission and state regulators, the firm has made considerable progress in instituting shareholder-friendly reforms. While we're continuing to monitor the situation, we think the way is clear for investors to once again invest in the firm's strongest offerings.
As part of its Feb. 5 deal with regulators, MFS agreed to pay $225 million to settle charges that shareholders were harmed when MFS allowed market-timing in 11 of its mutual funds, despite prospectus language that suggested quick-trading would not be allowed. (Fast-trading can dilute long-term shareholders' gains and add to a fund's expenses.) The officials said shareholders were further harmed when fast-trading clients placed illegal, after-hours trades in MFS funds.