New York, Oct 02: Alliance Capital Management Holding said on Tuesday it has suspended two executives after finding conflicts of interest related to MF trading, as a widening government probe hit the largest publicly-traded US fund company. The suspensions mark the latest fallout from a regulatory investigation into the practices of the nearly $7 trillion US MF business. With the industry under fire because of the scandal, Securities & Exchange Commission chairman William Donaldson told Congress on Tuesday his agency is moving to crack down on improper trading in mutual fund shares.
New York-based Alliance Capital, whose stock slipped about 5.7% on Tuesday, said it had been contacted by Mr Spitzer and the SEC as part of their investigations. In early September, Mr Spitzer unveiled a probe into “market timing” and “late trading” of mutual fund shares that resulted in a $40m settlement with hedge fund Canary Capital Partners.
Spitzer named Bank of America Corp, Bank One Corp, Janus and Strong Capital Management in his complaint. No charges have been brought against the companies. Market timing involves trading strategies designed to profit from temporary pricing imbalances, while late trading relates to purchases after the stock market closes. Regulators say these practices could be costing average fund investors billions of dollars.
Bureau Report