U.S. market regulators charged mutual fund group PIMCO Advisors Fund Management LLC with fraud on Thursday, widening the trading scandals engulfing the $7.6 trillion fund industry.

The U.S. Securities and Exchange Commission said it brought civil fraud charges against PIMCO Advisors — which changed its name this week to PA Fund Management LLC — and some company affiliates, as well as two individuals.

“This action represents yet another example of a well-known mutual fund advisor placing its own interests above those of the fund shareholders through an undisclosed market timing arrangement,” said SEC Enforcement Director Stephen Cutler.

PIMCO’s PEA Capital affiliate said in a statement it was “disappointed the SEC chose to take this action now.” It said it was looking forward “to completing settlement discussions with the SEC, which have been underway, so we can achieve a prompt and equitable resolution to this matter.”

Like other recent scandals involving mutual funds, the SEC’s charges focused on market timing — or rapid buying and selling of fund shares — in deals with hedge fund Canary Capital Partners, which has been involved in other scandals.

The SEC charged that PIMCO Advisors Chief Executive Stephen Treadway around January 2002 approved arrangements to let Canary do timing trades in PIMCO funds in exchange for long-term investments, known as “sticky assets.”

Canary put $27 million in long-term investments into a mutual fund and a hedge fund from which PIMCO affiliates earned management fees. In return, Canary got more than $60 million in timing capacity in several mutual funds, the SEC said.

During the arrangement, which lasted from February 2002 to April 2003, other investors were prevented from timing, while the broker-dealer that did Canary’s trades got privileged information about fund holdings, the SEC said.

When he signed off on these arrangements, Treadway was not only CEO of PIMCO Advisors, but also chairman of the board of trustees for PIMCO Funds: Multi-Manager Series, the SEC said.

Treadway did not disclose his knowledge of the Canary deal to the board until about September 2003, the SEC said.

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