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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2767)	9/3/2003 12:35:09 PM
From: The Duke of URL©	Read Replies (1) \| Respond to of 3602

Thank heaven for Eliot Spitzer, he is not only willing to do something, as apposed to the congress and the sec, but he is one of the few who understands what happened. Markets : Matthew Goldstein Spitzer Takes Aim at Funds By Matthew Goldstein Senior Writer 09/03/2003 10:50 AM EDT Click here for more stories by Matthew Goldstein Updated from 9:56 a.m. EDT The mutual-fund industry, already under fire for failing to disclose hidden fees on investors, now faces allegations that at least one hedge fund racked up tens of millions of dollars by illegally trading in mutual-fund shares. At a noon press conference, New York Attorney General Eliot Spitzer will announce a $40 million settlement with a hedge fund over allegations that it engaged in illegal trading in mutual fund shares sold by a number of Wall Street firms and banks, sources said. The investigation found instances in which the hedge fund and mutual funds engaged in "late trading" and "market timing," a practice that would appear to denote the purchase of fund shares at their 4 p.m. closing price, but many hours after that time. Such pricing provides savvy investors an easy arbitrage opportunity if they know how stocks -- especially foreign stocks -- have performed during the interval. Such a scheme would imply some complicity on the part of the mutual-fund brokers themselves. The hedge fund settling with Spitzer's office is Canary Capital Partners, managed by Edward Stern. Canary will pay $30 million in restitution -- representing its illegal trading profits -- plus a $10 million fine. A telephone number for the fund couldn't be found. For now, it's not known if Spitzer's office intends to pursue legal action against the Wall Street firms that allegedly sold the mutual funds shares to Canary. Spitzer's office has identified those firms as being Bank of America's (BAC:NYSE - commentary - research) Nation's Funds, Bank One (ONE:NYSE - commentary - research), Janus and Strong. In a press release, Spitzer likened the activity of the hedge fund to "betting on a horse race after the horses have crossed the finish line." Earlier this summer, Spitzer joined with Massachusetts Secretary of the Commonwealth William Galvin in an investigation of allegations that Morgan Stanley (MWD:NYSE - commentary - research) pressured brokers to sell the firm's in-house mutual-fund products at the expense of other funds. The Securities and Exchange Commission and NASD also have set their sights on Wall Street and the mutual-fund industry this year. Both regulatory agencies have been investigating hidden fees charged by mutual funds and allegations that some Wall Street firms push their customers to buy shares in more expensive mutual fund offerings. ....... google news