Victims of rapid trading are getting some money -- enough for a night on the town. By Bob Frick, Senior Editor July 31, 2007 Investors who lost money because of the rapid-trading rip-off uncovered in 2003 are finally getting some payback. Holders of PBHG funds (a family that no longer exists) are in the process of receiving checks totaling $267 million, and millions more shareholders in other fund families will split about $3 billion more over the next few years.The method used to calculate payouts is complex, so it's hard to say who will get how much. Clients who had money in certain PBHG funds between June 1998 and December 2001 will receive about $180, on average, says Kenneth Lehn, a University of Pittsburgh finance professor who crafted the payout plan for the Securities and Exchange Commission. Individual payouts for other PBHG shareholders are unlikely to exceed $500. The money for the $3-billion-plus restitution pot comes from fund companies, executives and big investors who broke trading rules by engaging in a practice sometimes labeled market timing but more properly described as rapid trading. By illegally trading in and out of funds quickly, the traders exploited fund prices that didn't reflect the actual prices of the assets in those funds. Customers ended up paying for the illegal profits in the form of lower fund-share prices. Some of the largest paybacks will come from Invesco ($375 million), Janus ($225 million) and Bank of America ($375 million). In the PBHG case (and probably all the other cases), payments won't be made for amounts less than $10, Lehn says. Money that can't be returned -- because of uncashed checks, for example -- will be added to funds in which rapid trading occurred. But those additions will cause only minuscule increases in share prices. Advertisement The SEC and state securities agencies have done a good job handling the payouts, says Niels Holch, executive director of the Coalition of Mutual Fund Investors, a consumer group. But tracking these cases isn't easy, he says. Fortunately, the Coalition of Mutual Fund Investors offers a rundown of the cases online.