Defendant Name: Waddell & Reed Services Company

Defendant Type: Subsidiary of Public Company

Document Reference: 34-69437

Document Details

Legal Case Name In the Matter of Waddell & Reed, Inc., Waddell & Reed Investment Management Company, and Waddell & Reed Services Company
Document Name Notice of Proposed Plan of Distribution and Opportunity For Comment
Document Date 23-Apr-2013
Document Format Administrative Proceeding
File Number 3-12372
Allegation Type Investment Advisers/Investment Companies
Document Summary On April 23, 2013, the SEC issued a Notice that the Division of Enforcement had submitted a proposed plan of distribution for the distribution of monies in the Fair Fund in the matter to the Commission. According to the SEC: "The Proposed Plan of Distribution provides for investors to receive monies from the Fair Fund that represent their proportionate share of losses suffered by the fund due to market timing by the Timers and a proportionate share of advisory fees paid by funds that suffered losses during the period of market timing from December 1, 1998 through October 31, 2003.... The methods of calculation of each eligible investor's share of the Fair Fund are intended to result in payment to each eligible investor that restores the impaired value of the investor's investment in the harmed funds plus a partial refund of advisory fees. The Fair Fund is not intended to compensate investors for losses they incurred because of fluctuations in securities markets that were unrelated to Respondents' conduct."

Disgorgement & Penalty Information

Resolutions
Cease and Desist Order
Fair Funds
Plan of Distribution
Monetary Penalties:

Disgorgement

Individual:     Shared:     $40,000,000.00
Shared with: Waddell & Reed Investment Management Company; Waddell & Reed, Inc.

Civil Penalty

Individual:     Shared:     $10,000,000.00
Shared with: Waddell & Reed Investment Management Company; Waddell & Reed, Inc.

Total Penalty

Individual:     Shared:     $50,000,000.00
Shared with: Waddell & Reed Investment Management Company; Waddell & Reed, Inc.

Related Documents:

34-54193 24-Jul-2006 Administrative Proceeding
Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 15(b) and 17A(c) of the Securities Exchange Act of 1934, Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 and Sections 9(b) and 9(f) of the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order
On July 24, 2006, the SEC instituted settled administrative and cease-and-desist proceedings against Waddell & Reed, Inc., Waddell & Reed Investment Management Company, and Waddell & Reed Services Company. According to the SEC: "the Respondents permitted a number of individuals and entities (the 'Market Times' or 'Timers') to market time certain funds in the Waddell & Reed mutual fund complex ('Waddell & Reed funds'), subject to certain limitations on the number, amount and frequency of trades, from at least as early as 1995 through 2003".
34-69437-pdp 23-Apr-2013 Administrative Proceeding
Proposed Plan of Distribution
According to the SEC: "The Distribution Plan seeks to distribute to accountholders, for the period spanning December 1998 through October 2003, a proportionate share of the fund as compensation for dilution losses they may have suffered as a result of market timing be fee-paying timers in the Waddell & Reed mutual fund complex ('W&R Funds') and advisory fees they may have paid during the relevant period. The Fair Fund is not intended to compensate accountholders for losses they incurred solely because of fluctuations in securities markets." The Respondents retained James C. Meehan of Cornerstone Research as the Independent Distribution Consultant to develop the Plan of Distribution.
34-70151 09-Aug-2013 Administrative Proceeding
Order Approving Plan of Distribution, Appointing a Fund Administrator, and Waiving Bond Requirement
On August 9, 2013, the SEC issued an order in this matter. The SEC approved the Distribution plan as proposed by the Division of Enforcement, "appoint Rust Consulting, Inc. as the Fund Administrator" and "waive the bond requirement for good cause shown."
34-72610 15-Jul-2014 Administrative Proceeding
Order Directing Disbursement of a Fair Fund
On July 15, 2014, the SEC ordered that the Fair Fund be transferred "to Deutsche Bank" and that "the Fund Administrator shall distribute such monies to investors as provided for in the Plan [of Distribution]."
34-74079 16-Jan-2015 Administrative Proceeding
Order Directing Disbursement of a Fair Fund
On January 16, 2015, the SEC ordered that, "the Commission staff shall transfer $311,298.11 of the Fair Fund to Deutsche Bank and the Fund Administrator shall distribute such monies to investors, as provided for in the Plan." Previously, $52,332,274,34 in disgorgement and civil penalties and accrued interest had been distributed by the Fund Administrator to injured investors according to the methodology in the Plan of Distribution.
34-74756 17-Apr-2015 Administrative Proceeding
Order Directing Disbursement of a Fair Fund
On April 17, 2015, the SEC ordered that, "the Commission staff shall transfer $45,779,35 of the Fair Fund to Deutsche Bank and the Fund Administrator shall distribute such monies to investors, as provided for in the Plan." Previously, $52,643,572.45 in disgorgement and civil penalties and accrued interest had been distributed by the Fund Administrator to injured investors according to the methodology in the Plan of Distribution.
34-75485 17-Jul-2015 Administrative Proceeding
Order Directing Disbursement of a Fair Fund
On July 17, 2015, the SEC ordered that, "the Commission staff shall transfer $17,204.59 of the Fair Fund to Deutsche Bank and the Fund Administrator shall distribute such monies to investors, as provided for in the Plan." Previously, $52,689,351.80 in disgorgement and civil penalties and accrued interest had been distributed by the Fund Administrator to injured investors according to the methodology in the Plan of Distribution.
34-81064_3-12372 30-Jun-2017 Administrative Proceeding
Notice of Name Change of Appointed Tax Administrator
On June 30, 2017, the SEC announced a Name Change of Appointed Tax Administrator, and amended the Omnibus Order, beginning June 2017 and for calendar year 2018, to replace all references to Damasco with "Miller Kaplan Arase LLP which acquired Damasco & Associates LLP" in order to reflect Damasco's name change.
34-82333 14-Dec-2017 Administrative Proceeding
Order Directing Disbursement of a Fair Fund
According to the SEC: "The Commission staff is satisfied that the IDC and the Fund Administrator have taken all steps required under the Plan to distribute the Fair Fund to individual account holders. The Commission staff, IDC, and the Fund Administrator have determined that it is economically feasible to make a residual distribution with the Unclaimed Distributions to the W&R Funds in accordance with the Plan [...] Accordingly, it is ORDERED that the Commission staff shall transfer $541,990.33 to Deutsche Bank and the Fund Administrator shall distribute this sum, along with the $8,611,958.77 in funds held at Deutsche Bank for a total distribution of $9,153,949.10, to six (6) affected W&R Funds in accordance with the Plan."
34-84815 13-Dec-2018 Administrative Proceeding
Order Authorizing the Transfer to the U.S. Treasury of the Remaining Funds and Any Funds Returned to the Fair Fund in the Future, Discharging the Fund Administrator, and Terminating the Fair Fund
On December 13, 2018, the SEC ordered that: "A. The remaining Fair Fund balance of $1,283.00 and any funds returned to the Fair Fund in the future, shall be transferred to the U.S. Treasury [...]; B. The Fair Fund is terminated; and C. The Fund Administrator, Rust Consulting, Inc., is discharged."