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Spitzer: Expect Criminal Charges in Fund Probe

November 21, 2003|From Reuters and Bloomberg News

New York Atty. Gen. Eliot Spitzer told Congress it was probable his office would bring criminal charges in the probe of trading abuses in the mutual fund industry.

The charges would go beyond the civil actions that Spitzer and the Securities and Exchange Commission have lodged against fund firms and individuals so far.

"It's fair to presume that there will be criminal cases brought," Spitzer said at a hearing of the Senate Banking Committee. "That may be the death penalty for these institutions."

Spitzer said he had told fund executives he would resort to "draconian" penalties for firms that repeatedly allow favored investors to trade in and out of funds or place orders after the 4 p.m. market close while still getting that day's prices.

Separately, Riverside County joined the list of public entities that have pulled money from Putnam Investments. County officials said they ordered the withdrawal of $10 million in employee deferred-compensation accounts because of concern over improper trading charges against two of the Boston-based firm's fund managers.

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