PBHG Funds Founders Banned from Industry NEW YORK (Reuters) - The founders of PBHG mutual funds agreed to pay $160 million in restitution and civil fines and to be banned for life from the securities industry to resolve allegations they facilitated improper trading in the funds, regulators said on Wednesday. Gary Pilgrim and Harold Baxter, who left the funds group a year ago, will each pay $60 million in disgorgement and $20 million in civil penalties, the Securities and Exchange Commission said in a statement. The payouts are the largest by any individual since the mutual fund scandals erupted more than a year ago and among the largest in the history of the SEC, the agency's staff said. Pilgrim and Baxter secretly allowed improper market timing arrangements with favored clients against sharp limits set for other investors in PBHG funds, New York Attorney General Eliot Spitzer said in a statement. "As founders of a company that bore their names, Mr. Pilgrim and Mr. Baxter should have set an example of integrity and fair play," Spitzer said. "Instead, they were at the center of improper conduct that deceived and harmed their clients." The fines and restitution are virtually unprecedented for individuals in civil cases, said Stephen M. Cutler, director of the SEC's Division of Enforcement. "Along with the permanent bars, the monetary sanctions we have obtained here reflect the severity of the misconduct and the fundamental breach of duty at issue in this case," he said. The agreement with Pilgrim and Baxter comes after regulators in June announced a $100 million settlement with Pilgrim Baxter & Associates, a company they founded in 1982 and sold in 2000 to Old Mutual Plc (OML.L: Quote , Profile , Research ) of South Africa. The firm, now known as Liberty Ridge Capital, is the investment adviser to the PBHG funds. Old Mutual said in June it will press the two founders for compensation, and said it would retain $69 million that was meant to be paid them. An Old Mutual spokesman said the $69 million had not been paid, but he declined any further comment. Old Mutual Chief Executive Jim Sutcliffe said in June that legal action was possible against Baxter and Pilgrim. Liberty Ridge said in a statement it was pleased the settlement called for restitution to affected PBHG shareholders. It said it was working on a distribution plan that would be acceptable to PBHG's board of trustees and the SEC. Since Spitzer unveiled his investigation into mutual funds trading in September 2003, companies that have settled with regulators have agreed to pay $1.17 billion in restitution to investors and $821 million in civil penalties. They also have agreed to reduce their fees by $925 million over five years. (Additional reporting by Joel Rothstein) Quelle "PBHG Funds Founders Banned from Industry" : reuters.com Main page for "PBHG Funds Founders Banned from Industry"