PIMCO Receives SEC Wells Notice On Total Return ETF


It looks more and more like this man is being missed

Well known asset management firm PIMCO announced that it received a “Wells Notice” from the SEC related to its Total Return exchange-traded fund on Monday. “BOND” is an actively traded ETF that is designed to track PIMCO’s flagship Total Return Bond Fund.

Keep in mind that an SEC “Wells Notice” is not an allegation of wrongdoing nor a definite claim that a law was violated. It simply indicates that the SEC’s enforcement staff has conducted an investigation and and will, barring new evidence, recommend that the SEC bring a legal action against the party receiving the noticed.

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Shortly before famed bond king Bill Gross left PIMCO for Janus in September 2014, media reports surfaced suggesting that the SEC was investigating the Total Return ETF. At that time, the reports suggested that the investigators were looking into how PIMCO was valuing some bonds in the fund.

As the saying goes, where there’s smoke, there’s fire, and it looks like maybe Gross had a better reason to jump ship last fall than just an ego trip and a disagreement with the PIMCO board.

More on PIMCO Total Return ETF receiving Wells Notice

According to PIMCO’s statement released Monday afternoon, the Wells Notice relates to the fund’s process for valuing smaller positions in mortgage-backed securities not guaranteed by the government between its inception on Feb. 29, 2012 and June 30th of 2012.

The nonpublic investigation by the SEC also apparently took a closer look at the fund’s performance disclosures as well as compliance policies.

Statement from PIMCO

“The Wells process provides us with our opportunity to demonstrate to the SEC staff why we believe our conduct was appropriate, in keeping with industry standards, and that no action should be taken. We will continue to engage with the SEC and we are confident that this matter will not affect our ability to serve our clients,” Pimco said in a statement Monday.