FleetBoston Financial Corp.’s mutual
fund group may be barred from managing funds by the Securities
and Exchange Commission, the second time such a penalty has been
sought in the federal and state inquiries of improper trading.
The SEC and New York Attorney General Eliot Spitzer accused
Fleet’s Columbia fund management and distribution units of
allowing $2.5 billion of short-term trades by investors including
hedge funds that hurt other holders and violated prospectuses.
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Columbia, run by Chief Executive Keith Banks, created a
secret list of accounts authorized for frequent trading in return
for assets in other funds that helped boost fees, the SEC said in
its lawsuit. Regulators are examining trading at more than 20
firms including Franklin Resources Inc. in the biggest probe of
mutual funds. The scandal prompted Congress and the SEC to
propose rules to improve governance in the $7.4 trillion
industry.
Bloomberg News
