2008-08-03 09:30:08 - Pax World Management Corp. has agreed to settle charges from SEC and agreed to pay $500,000.

On Wednesday Socially responsible investment organization Pax World Management Corp. has agreed to settle charges from the U.S. Securities and Exchange Commission (SEC) and has agreed to pay $500,000. The SEC alleged that Portsmouth, N.H.-based Pax World Management Corp. violated its own investing restrictions over a five-year period by purchasing securities in companies that failed environmental or labor standards or

derived revenue from alcohol, gambling or contracts with the U.S. Department of Defense. According a statement from the SEC Pax World, the SEC-registered investment adviser to several socially responsible mutual funds, including the Pax World Growth Fund and Pax World High Yield Fund, purchased at least 10 securities that the Funds'' socially responsible investing (SRI) restrictions prohibited them from buying - contrary to representations it made to investors and the boards of the Funds. The SEC alleged for instance, that Pax World Management Corp., a pioneer in the growing socially responsible investing niche, in 2003 purchased for the Growth Fund securities issued by an oil and gas exploration company that had failed its three most recent screens and in 2004, Pax World purchased for the High Yield Fund securities issued by a conglomerate primarily engaged in the shipping industry but which derived revenue from gambling and the manufacture of liquor. Linda Chatman Thomsen, Director of the SEC''s Division of Enforcement said: 'Advisers simply cannot tell investors they are going to do one thing with their funds and then not follow through on those promises." Without admitting or denying the findings in the SEC''s Order, Pax World agreed to be censured and to cease and desist from any further violations of certain antifraud, false filing, and other provisions of the securities laws in addition to paying the $500,000 penalty. Reportedly the socially responsible investment industry is estimated to hold more than $2.7 trillion in investor assets last year, according to the Social Investment Forum. And the Wall Street Journal noted that while socially responsible funds have garnered strong interest from investors, their critics say the approach can be difficult to implement and can detract from investment performance. In a statement, Pax World Management Corp. chief executive office Joseph Keefe, who noted that the SEC investigation began in 2004prior to his arrival as Pax World's CEO in May 2005, said in a letter to its more than 100,000 investors that ' [he] worked diligently to address all issues of concern and to cooperate with the SEC in its investigation [, t]he Pax World Balanced Fund, which held approximately 92-97% of Pax World assets during this time period, did not purchase any unscreened securities and was not cited in the Order [and ] the social screening issues described in the SEC's Order did not cause any financial harm to shareholders.-Pax World's response to these issues has been vigorous. The portfolio managers of the two funds involved - the Growth Fund and the High Yield Bond Fund - as well as the head of the Social Research Department, and Pax World's-We are confident that the steps we have taken to upgrade Pax World management, personnel and compliance controls will help us assure that mistakes of this nature are not made in the future' )For the complete statement of Pax World Management Corp. CEO Joseph Keefe please see also: paxworld.com/homepage/2008/07/30/a-letter-from-the-president-and-ceo-of-pax-world-funds).
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