“Federal and state regulators are nearing an agreement with Janus Capital Group Inc. under which the firm would pay more than $200 million to settle allegations that it allowed improper trading of its fund shares, according to people familiar with the negotiations,” wrties Tom Lauricella in today’s Wall Street Journal.

“The agreement — which would include fines, disgorgement of profits and reductions in its fund management fees — has yet to be finalized, but could be completed as soon as this week, these people said.”

“Representatives of Janus, Denver, declined to comment. Janus previously has said that it was in settlement discussions with the Securities and Exchange Commission, the New York Attorney General, the Colorado Attorney General and the Colorado Securities Commissioner.”

“Janus has been under investigation for allegedly entering into agreements to allow selected investors to engage in rapid-fire trading of the firm’s funds, which skims profits out of the accounts of long-term investors. That type of trading, often called market timing, isn’t necessarily illegal, but Janus had publicly stated policies under which it said it discouraged such trading.”

“A settlement in the area of $200 million would dwarf Janus’s own estimate of the harm that its fund shareholders had suffered as a result of the rapid trading. Late last year Janus agreed to reimburse $31.5 million to its funds to compensate investors.”

“In addition, several top executives have resigned or taken leaves from Janus. Last week Mark Whiston stepped down as chief executive officer of the firm, but Janus officials denied that his resignation was part of a deal to settle any charges.”

“When New York Attorney General Eliot Spitzer unveiled his investigation into improper fund-share trading in September, Janus was one of four fund companies named but not charged. Since then, five mutual-fund companies have settled allegations that they secretly allowed harmful trading and regulators have extracted roughly $1.7 billion in penalties.”

“Janus, with $81 billion in stock and bond fund assets, is the ninth-largest mutual fund company, according to Financial Research Corp.”

http://online.wsj.com/article/0,,SB108301930729494060,00.html