Janus Capital Group, Inc. ("Janus" or the Company) is an investment firm.
The Complaint charges Janus and Janus Capital Management LLC (“JCM”) with violations of Section 11 of the Securities Act of 1933 for false and misleading statements and omissions in the prospectuses, and common law breach of fiduciary duty. Specifically, the Complaint alleges that during the Class Period, the Janus High- Yield Fund and Janus Mercury Fund engaged in illegal and/or improper trading practices, in concert with certain institutional traders, which caused financial injury to the shareholders of the subject mutual funds, in return for substantial fees and other income for themselves and their affiliates. The Complaint alleges that the schemes at Janus took two primary forms. First is the "late trading" of mutual fund shares by select customers of the fund (including hedge funds). The second was "timing," describes below.
Specifically, the Complaint alleges that Defendants violated Sections 11 and 15 of the Securities Act of 1933; Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder; and Section 206 of the Investment Advisers Act of 1940. The Complaint charges that throughout the Class Period, Defendants failed to disclose that they improperly allowed certain hedge funds, such as Canary, to engage in the timing of their transactions in the Funds' securities. Timing is excessive, arbitrage trading undertaken to turn a quick profit. Timing injures ordinary mutual fund investors -- who are not allowed to engage in such practices -- and is acknowledged as an improper practice by the Funds. In return for receiving extra fees from Canary and other favored investors, Janus and its subsidiaries allowed and facilitated Canary's timing activities, to the detriment of class members, who paid, dollar for dollar, for Canary's improper profits. These practices were undisclosed in the prospectuses of the Funds, which falsely represented that the Funds actively police against timing.
Following the market timing investigations by the New York Attorney General and the SEC, Janus and certain affiliates were named as Defendants in a consolidated lawsuit. Five amended Complaints were filed in these coordinated proceedings, including: (i) claims by a putative class of Janus fund investors asserting claims on behalf of the investor class (Marini, et al. v. Janus Investment Fund, et al., U.S. District Court, District of Maryland, Case No. 04-CV-00497); (ii) derivative claims by investors in the Janus funds ostensibly on behalf of the Janus funds (Steinberg et al. v. Janus Capital Management, LLC et al., U.S. District Court, District of Maryland, Case No. 04-CV-00518); (iii) claims on behalf of participants in the Janus 401(k) plan (Wangberger v. Janus Capital Group Inc., 401(k) Advisory Committee, et al., U.S. District Court, District of Maryland, Case No. JFM-05-2711); (iv) claims brought on behalf of shareholders of Janus on a derivative basis against Janus’ Board of Directors (Chasen v. Whiston, et al., U.S. District Court, District of Maryland, Case No. 04-MD-00855); and (v) claims by a putative class of Janus shareholders asserting claims on behalf of the shareholders (Wiggins, et al. v. Janus Capital Group Inc., et al., U.S. District Court, District of Maryland, Case No. 04-CV-00818).
Despite the complex, ongoing litigation, a press release dated April 28, 2004 states that Janus agreed to a $226 million settlement with federal and state regulators over charges that the Denver company allowed sophisticated traders to buy and sell its fund shares at the expense of other shareholders. The settlement included an agreement to set aside $100 million to compensate investors for the adverse effects of the trading. Janus will also reduce its fund-management fees by $125 million over five years. Janus said it will take a charge of $59 million, or 21 cents a share, against first-quarter earnings, because of the settlement.
In August 2005, the U.S. District Court entered orders dismissing most of the claims asserted against the Company and its affiliates by fund investors in the Marini and Steinberg cases, except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. The U.S. District Court also entered an order dismissing all claims in the Wiggins lawsuit. Plaintiffs have appealed that dismissal. In August 2006, the U.S. District Court in the Wangberger 401(k) plan class action dismissed the action with prejudice, and the Plaintiff appealed the dismissal to the U.S. Court of Appeals for the Fourth Circuit. Finally, the U.S. District Court also dismissed the Chasen lawsuit against Janus’ Board of Directors without leave to amend, ruling that the Plaintiff had failed to make a pre-suit demand on the Board of Directors as required by applicable state law. The time to appeal this dismissal has expired. As a result of the above events, the Company and JCM are the remaining Defendants, in some capacity, in one or more of the actions described here.
The Auditor of the State of West Virginia, in his capacity as securities commissioner, initiated administrative proceedings against many of the Defendants in the market timing cases (including Janus) and seeks disgorgement and other monetary relief based on similar market timing allegations (In the Matter of Janus Capital Group Inc. et al., Before the Securities Commissioner, State of West Virginia, Summary Order No. 05-1320). In September 2006, Janus filed its answer to the Auditor’s summary order instituting proceedings, and requested a hearing. A hearing was held in June 2007, during which the parties were ordered to submit a scheduling order. In addition to a recently filed Motion to Discharge Order to Show Cause, Janus continued to challenge the statutory authority of the Auditor to bring such an action.
According to the Company's quarterly report for the period ending September 30, 2007, and despite a settlement agreement reached in 2004, litigation against Janus and other firms continued with respect to claims of illegal market timing actions.
On July 07, 2009, a Decision by Court stated, this action came to trial or hearing before the Court. The issues have been tried or heard and a decision has been rendered. The Judgment was entered in favor of Defendants and against Plaintiffs.
On May 19, 2010, a Preliminary order for Settlement was entered.
On May 18, 2010, an Order Preliminarily Approving Settlements of Class Action and Establishing Notice Procedures was issued by the Court.
On May 19, 2010, a Preliminary Order for Notice and Hearing in Connection with Settlement Proceedings in the Janus Subtrack was issued by the Court.
On July 14, 2010, an Order was issued upon the consideration of the parties’ joint request for a stay pending the Supreme Court’s resolution of the issues as to which it has granted certiorari.
On September 14, 2010, a Memorandum of Law in support of Plaintiff's motion for final approval of settlements, approval of plan of allocation, and certification of settlement class was entered.
On October 25, 2010, an Order and Final Judgment was issued affirming its findings in its Preliminary Approval Order that, for purposes of settlement only.
On July 18, 2012, the case was administratively closed - signed by The Hon. J. Frederick Motz.
Several putative stockholder class action lawsuits were filed in United States District Court for the Southern District of New York against Defendants Janus. The Funds, and the symbols for the respective Funds are named as follows:
Janus Fund (JANSX)
Janus Enterprise Fund (JAENX)
Janus Mercury Fund (JAMRX)
Janus Olympus Fund (JAOLX)
Janus Global Technology Fund (JAGTX)
Janus Orion Fund (JORNX)
Janus Twenty Fund (JAVLX)
Janus Venture Fund (JAVTX)
Janus Global Life Sciences Fund (JAGLX)
Janus Global Value Fund (JGVAX)
Janus Overseas Fund (JAOSX)
Janus Worldwide Fund (JAWWX)
Janus Balanced Fund (JABAX)
Janus Core Equity Fund (JAEIX)
Janus Growth and Income Fund (JAGIX)
Janus Special Equity Fund (JSVAX)
Janus Risk-Managed Stock Fund (JRMSX)
Janus Mid Cap Value Fund (JMCVX, JMIVX)
Janus Small CapValue Fund (JSCVX, JSIVX)
Janus Federal Tax-Exempt Fund (JATEX)
Janus Flexible Income Fund (JAFIX)
Janus High-Yield Fund (JAHYX)
Janus Short-Term Bond Fund (JASBX)
Janus Money Market Fund (JAMXX)
Janus Government Money Market Fund (JAGXX)
Janus Tax-Exempt Money Market Fund (JATXX)
