Buys violated funds’ principles
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Like other mutual fund companies in the “socially responsible” investing niche, Pax World Management Corp. of Portsmouth, N.H., is bound to follow strict ethical codes in how it picks securities.
Turns out its fund shareholders could have benefited from one more criterion: truth in advertising.
Pax World agreed Wednesday to pay $500,000 to settle a Securities and Exchange Commission probe into whether its funds misled investors by violating basic principles of socially responsible investing, such as steering clear of alcohol and gambling companies.
From 2001 to 2005, two of the firm’s funds -- its Growth fund and its High Yield fund -- bought 10 securities that violated the company’s own socially responsible guidelines, according to the SEC.
The agency said each security violated the firm’s standards on one or more of these counts: alcohol, gambling, defense contracting, environmental issues or labor ethics.
In all, Pax didn’t screen 41 investments to see if they met its criteria, the SEC said.
In a statement, Pax World CEO Joseph F. Keefe said the $2.6-billion-asset company had done a “top-to-bottom reorganization” to “help us assure that mistakes of this nature are not made in the future.”
-- Walter Hamilton
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