After receiving a Wells notice from the SEC, about some Pimco securities that contain bundled mortgages, Pimco released a statement disclosing the possibility of facing a federal lawsuit over how it valued positions held by one of its enormous bond funds.
Between Feb. 29th and June 30th 2012, Pimco may have misrepresented the value of certain securities purchased by its Total Return Active Exchange-Traded Fund (BOND).
The Total Return Active ETF has more than $2.5 billion net assets, according to Pimco, and invests primarily in low-risk debt securities. The fund has a year-to-date return of about 2%.
“The Wells process provides us with our opportunity to demonstrate to the SEC staff why we believe our conduct was appropriate, in keeping with industry standards, and that no action should be taken,” Pimco said in a statement.