Kenneth Corba -- fund manager, PEA Capital officer, and most importantly central figure to market timing allegations against PIMCO -- "made a personal decision" to resign, reported the Wall Street Journal Wednesday.

A spokesperson for PIMCO did not immediately return calls for comment.

Corba was the chief investment officer and managing director of PEA Capital, a unit of Allianz Dresdner Asset Management, and member of the board of Allianz Dresdner Asset Management of America, a unit of insurer Allianz AG

Since March 1999, he had also managed two stock funds: the PEA Growth Fund with $844 million under management and the $95 million PEA Growth & Income Fund. Prior to that, he was the chief investment officer of Eagle Asset Management.

Corba plays a central role in a complaint against PIMCO filed by New Jersey Attorney General Peter C. Harvey and New Jersey Bureau of Securities Chief Franklin L. Widman. The complaint, filed in mid-February, alleges that Corba was knew about market timing arrangements with a broker dealer acting for Canary Capital. The New Jersey officials are seeking disgorgement of profits, restitution to investors, and monetary penalities.

In an email from Corba to the broker dealer, Corba stated "We are monitoring our agreed upon maximum of 4 round trips per month. The pattern that is most disturbing to me is that you only seem to be interested in being in our funds for a day or two at a time – perhaps the most opportunistic but extreme form of market timing I have ever seen." PIMCO Funds’ prospectus states investors can only make six round trip trades per year.

The company also admitted that it had been notified by the SEC on February 12th that the agency would seek penalties and disgorgement of gains related to market timing.

In a February letter, PIMCO’s chiefs adamantly denied knowing about the arrangements --"'200 market timing trades’? ‘Sticky assets’? Is PIMCO -- the bond manager--really down there at the bottom of the barrel? We shout an emphatic ‘NO!’" They continued "To the best of our knowledge, PIMCO has never had any arrangements pertaining to ‘sticky funds’, late trading/stale pricing arbitrage, or improper dissemination of fund holding." Addressing the Canary relationship specifically, they stated "To our knowledge, this Canary trading was infrequent, did not come close to violating the prospectuses and harmed no shareholders in the fund."

PIMCO, Canary Capital, and other defendants also face a class action suit filed in Connecticut in early March. The suit alleges that employees at PIMCO allowed Canary to market time in exchange for higher fees.

PIMCO had $373.7 billion in assets under management as of December 31, 2003. 

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