SEC disburses $185M to mutual funds sold by Prudential brokers

About 800 mutual funds that were affected by some illegal market-timing activities of brokers at Prudential Equity Group LLC will receive a distribution of $185 million as part a settlement Prudential reached with the Securities and Exchange Commission. This distribution, which the SEC announced today, is the first that will be made to mutual funds. The commission will distribute about $85 million more in the coming months, SEC officials noted in a statement. "This substantial distribution reflects the SEC's ongoing efforts to compensate mutual funds and their shareholders for the harm caused by illegal market timing," David P. Bergers, director of the SEC's Boston regional branch, said in a statement. "We look forward to disbursing the remaining funds in the coming months." In August 2006, the SEC said it had reached a settlement with Prudential, putting to rest allegations that a handful of Prudential’s registered representatives had engaged in market timing in 2001 by using fake names and making quick trades to boost commissions. The brokers have been sentenced to stays in a halfway house and varying periods of probation. Prudential also had to pay $325 million to the U.S. Justice Department and $5 million to the Massachusetts Securities Division. Jed Horowitz contributed to this story