U.S. mutual fund giant Janus Capital Group Inc. says it will pay US$31.5 million to fund customers whose investments were hurt by market-timing trades.

The company says that it had allowed several investors to conduct rapid trading of its fund shares and in a recent letter to shareholders said it had terminated those relationships and promised to “make whole” any investor who lost money as a result of improper trading.

Janus says the payment is based on the results from Ernst & Young’s inquiry into the impact of frequent trading on the funds and their shareholders.

Ernst & Young’s probe found that 10 investors in the funds were given the opportunity to purchase and redeem shares of certain Janus funds more frequently than what was normally allowed for other investors, Janus says

The payment doesn’t resolve the investigations by the Securities and Exchange Commission and by Colorado and New York officials, Janus said in a filing with the SEC.

The company says it expects the regulators will seek to have it pay civil penalties.

It adds that securities regulators haven’t approved or agreed to the payments.

In addition, the Janus board of director acted to improve the company’s corporate governance by naming independent director Steve. Scheid as nonexecutive chairman, effective January 1. Scheid, who was formerly vice chairman of Charles Schwab Corp., succeeds Landon Rowland, who is scheduled to step down as chairman on Dec. 31, and will continue as a director.