AXA firms to pay $242 mn over program glitch

Feb 03, 2011
The US computer-based investment branch of the French AXA group will pay $242 million in compensation and fines after hiding a program glitch that cost investors millions, the SEC said Thursday.

The US computer-based investment branch of the French AXA group will pay $242 million in compensation and fines after hiding a program glitch that cost investors millions, the SEC said Thursday.

Three units under AXA Rosenberg, a program-based investing subsidiary of AXA Investment Managers, will pay $217 million for their losses and a penalty of $25 million for covering up the code problems of a quantitative investment model program, the said.

The SEC charged the three units with securities fraud for hiding the coding , which it said disabled a key component in the program for managing risk.

AXA Rosenberg agreed to pay the compensation and fine to settle the charges, while not admitting guilt in the case.

The SEC said senior managers of the three entities discovered the two-year-old problem in June 2009.

But "instead of disclosing and fixing the error immediately," a senior official of the entities "directed others to keep quiet about the error and declined to fix the error at that time," the SEC said in a statement.

Robert Khuzami, the director of the SEC’s enforcement division, said the secretive nature of computer-based investment programs leads to weakened oversight in companies.

"The secretive structure and lack of oversight of quantitative models, as this case demonstrates, cannot be used to conceal errors and betray investors," he said.

Explore further: Lufthansa outsources IT infrastructure ops to IBM

add to favorites email to friend print save as pdf

Related Stories

Monster settles SEC backdating charges for $2.5M

May 18, 2009

(AP) -- Monster Worldwide Inc., which runs the Monster job search Web site, has agreed to pay $2.5 million to settle federal civil charges that it secretly backdated options for its executives and employees.

Dell Inc. paying $100 million in SEC deal

Jul 23, 2010

(AP) -- Computer maker Dell Inc. is paying $100 million to settle civil charges that it fraudulently used payments from Intel to pump up its profits to meet Wall Street targets over five years, the government announced Thursday.

Complexity of financial services industry

Jan 04, 2008

The financial services industry is complex and financial service professionals are becoming less distinguishable and more inter-related, according to a new RAND Corporation report issued today.

Recommended for you

Turner channels removed from Dish amid pact spat

17 hours ago

Channels such as Cartoon Network and CNN are no longer part of Dish's programming lineup as a deadline has passed for the satellite TV provider and Turner Broadcasting to renew their distribution agreement.

Verizon reports higher 3Q net income, revenue

18 hours ago

Verizon Communications Inc. on Tuesday reported higher net income and revenue in its third quarter, helped by strong wireless subscriber growth and demand for its high-speed FiOS Internet services.

Amazon, Simon & Schuster sign book retail deal

Oct 21, 2014

Amazon has reached a deal with American book publisher Simon & Schuster, the companies said, though the e-commerce giant remains at loggerheads with France's Hachette over e-book pricing.

User comments : 0