The Securities and Exchange Commission has distributed $125 million to 254,000 investors in PBHG Funds, who were harmed by fraudulent market timing by certain investors at the Wayne mutual fund during the dot-com boom.

Yesterday's payment was the first of three expected by Sept. 30 totalling about $267 million, the SEC said. Altogether, 384,000 shareholders will receive payments.

The money comes from a so-called "Fair Fund," which the SEC established with the proceeds of enforcement actions against Pilgrim Baxter & Associates Ltd. and its founders, Harold J. Baxter and Gary L. Pilgrim.

The SEC charged the money managers with allowing friends to jump in and out of funds in ways that violated the funds' prospectuses. The fraudulent trading occured between June 1998 and December 2001, according to the SEC.

The SEC said that market-timing enabled traders to reap $238 million in excess profits, with 68 pecent of that from the firm's Growth fund.

The once high-flying firm paid $90 million in penalties and disgorgement of ill-gotten profits. Baxter and Pilgrim each paid $80 million. With accrued interest, the total funds available to shareholders reached $267 million.

The Sarbanes-Oxley Act of 2002 established Fair Funds as a way to get more money back to victims of securities fraud. Before that act, only disgorged profits were available for distribution to shareholders. Now, the distribution includes penalties. The SEC said it has distributed more than $1 billion from Fair Fund accounts.