The socially concious mutual fund was fined $500,000 for violating investment restrictions.
The Securities and Exchange Commission has charged Pax World Management Corp. with violating investment restrictions in socially conscious mutual funds.
Neither admitting nor denying the SEC’s findings, the Portsmouth, N.H.-based fund manager settled with the SEC and was ordered to pay a $500,000 penalty.
Investors were told that their funds wouldn’t contain securities issued by companies involved in weapons manufacturing, alcohol, tobacco, or gambling, or those that might be involved in any operations that might harm the environment.
Pax World, the registered investment adviser to several of these funds, purchased at least 10 securities that they were barred from buying, the SEC alleged.
In 2003, Pax World purchased securities from an oil and gas exploration company for its Growth Fund.
A year later, the fund manager bought securities from a company that was involved primarily in the shipping industry but that also brought in revenue from gambling and liquor manufacturing. Those securities were in Pax World’s High Yield Fund.
The SEC also said that Pax World failed to screen 8% of all new securities purchases between 2001 and 2005, and that the fund manager failed to follow its own socially conscious policies consistently.
Aside from paying the fine, the firm agreed to be censured and to cease and desist from violations of securities laws.
“We regret and take full responsibility for what occurred during the 2001-2005 time period,” Joseph F. Keefe, president and chief executive of Pax World since 2005, said in a statement.
“We are also proud of the progress we have made, and we are committed to meeting the highest standards going forward,” he said. “We are pleased to report that these regulatory issues have been resolved.”
