Massachusetts Financial Services is in talks with the New York Attorney General Eliot Spitzer and has indicated it would be willing to discuss cutting mutual-fund management fees, the Wall Street Journal said on Friday, citing a person familiar with the matter.
The negotiations come as Alliance Capital Management Holding LP announced on Thursday it would pay a record-setting $250 million settlement to compensate mutual fund investors and cut fees to settle fraud charges involving improper trading.
The newspaper, citing people familiar with the matter, said that MFS, a unit of No. 3 Canadian insurer Sun Life Financial, is being investigated over whether it let as much as $2 billion in "timing" money flow into 11 of its biggest and most popular funds at peak moments.
According to the paper, people familiar with the matter say MFS has contended the figure is perhaps half that amount.
Company officials were not immediately able to be reached for comment.
On December 8, Sun Life announced the U.S. Securities and Exchange Commission said it would recommend enforcement action be taken against MFS for "market timing," a practice of letting brokers and hedge funds trade rapidly in and out of its funds' shares to profit from stale price data in violation of fund policies.