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Fund Times

Fund Times: Janus Investors Get (Very) Little Payback

Plus, news on Masters' replacement of Ariel, a new Calvert fund, and more.

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When  Janus Capital Group (JNS) reached a $226 million settlement with state and federal regulators in August 2004 over its involvement in the market-timing scandal that broke the previous year, $100 million dollars was set aside by the firm to pay out to investors injured by the firm's actions. An independent distribution consultant was charged with figuring out how that money should be distributed, and it recently submitted a proposed distribution plan for shareholder restoration to the Securities and Exchange Commission for public comment. At the end of the 30-day comment period, the SEC will accept the plan as is, reject it, or require the firm to make changes.

Ultimately, the consultant found that total losses (combining dilution, incremental portfolio trading and administrative costs, and total foregone appreciation) amounted to roughly $21 million. That is less than the $100 million Janus has set aside, but the full $100 million will be paid out. Even so, the payouts per shareholder will generally be very small, and any payout amounting to less than $10 will be put back in the fund affected rather than going to the shareholder remuneration. That seems like a reasonable cutoff to us, but it's worth noting that roughly two thirds of individual accountholders are entitled to a payout of $10 or less, and thus will not be getting a check. Those who believe they are entitled to direct restoration should contact Janus and file a claim for the amount lost.

Lawrence Jones does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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