The U.S. Department of Labor’s Employee Benefits SecurityAdministration has reached a settlement agreement withAtlanta-based Invesco Trust Company, a subsidiary of Invesco Ltd.,after the DOL found that Invesco Trust had violated the EmployeeRetirement Income Security Act by shoring up an investment fundwithout adequate disclosure to investors.

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According to the agency, the fund in question was the InvescoShort-Term Investment Fund, a multibillion-dollar collective fundcomposed of ERISA plan assets. The DOL found that Invesco violatedERISA when it took steps to keep ISTIF trading at $1, despite thefact that the fund’s net asset value had fallen below $1 due tolosses in the value of the fund’s securities holdings.

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One of Invesco’s steps was a series of support agreements withan affiliate to provide contingent financial support to the ISTIFwithout adequately informing the fund’s investors. Invesco alsokept some of the income ISTIF earned, rather than distributing itall to investors, so that it could increase the fund’s net assetvalue.

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Keeping part of the ISTIF’s income in the fund not only reducedthe distributions to plan investors in the ISTIF, but also reducedthe obligations of Invesco’s affiliate under the supportagreements.

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The DOL found that not only was there inadequate disclosure toERISA plan investors, but the firm’s actions resulted in losses toERISA plan clients. The settlement agreement addresses both ofthese findings by requiring Invesco to regularly disclose to ERISAplan investors the ISTIF’s holdings, its actual market value, andthe existence of any supporting measures used to bolster theISTIF’s net asset value. Additionally, Invesco must restore clientlosses that resulted from the ISTIF’s retention of income.

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The company was not available for comment by press time, butInvesco spokeswoman Jeaneen Terrio was quoted in the AtlantaJournal-Constitution saying that Invesco cooperated with theDOL investigation and “neither admitted nor denied wrongdoing.” Sheadded that the company agreed to the settlement “to reach aresolution and put it behind us.”

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