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Case ID: 3441 | Stocks | 06/01/2004
The parties have reached a $140 million settlement in an SEC administrative proceeding filed against mutual fund company Strong Capital Management Company and its owner, Richard Strong, on behalf of persons who own or owned mutual fund shares managed by the company. The settlement resolves security fraud charges involving improperly timed trading of mutual funds. Persons sold will take part in the settlement should contact the attorneys who prosecuted the case for more information.
Richard Strong, 62, will personally pay $60 million in penalties and disgorgement, the largest against any individual in the probe so far. Investigators say Strong personally made $1.8 million from improper trading practices. The settlement includes $140 million in disgorgement of profits and civil penalties, with $80 million to be paid by the Menomonee Falls, Wisconsin-based, mutual fund company. The terms of the settlement also include a 6% reduction in the fees Strong Capital charges investors for 5 years. The reduction is expected to cost the company another $35 million in lost revenue. Strong, who started his own company 30 years ago by selling mutual funds to farmers in the Midwest, has also agreed to a lifetime ban from working in the securities industry. Anthony D'Amato, a Strong Capital executive vice president, and Thomas Hooker, the company's compliance officer, were also banned from the industry for life. Strong Capital was one of the first mutual fund companies accused of improper trading when New York Attorney General Eliot Spitzer made the investigation public in September 2003. The company allegedly allowed hedge fund Canary Capital Partners, LLC, to engage in "market timing," where profits are made by making rapid trades in and out of funds. Later, Strong, who owns about 85% of Strong Capital and served as chairman and chief executive, was found to have personally profited by market timing funds managed by his own company. The settlement also stands out for a public apology made by Strong. Such statements are almost unheard of in securities settlements because they potentially put the companies at risk in future civil litigation. Strong admitted to engaging in market timing despite advice given by his firm to investors that discouraged such trading. "My personal behavior in this regard was wrong and at odds with the obligations I owed my shareholders," he said in a statement.
At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest A class action has been filed against Fidelity Management & Research Company and FMR Company, Inc., on behalf of all shareholders in the Fidelity Contrafund, the Fidelity Growth & Income Fund, the Fidelity Magellan Fund, the Fidelity Blue Chip Growth Fund, and the Fidelity Low-Priced Stock Fund, who allege that the companies have charged them excessive fees for the management of the funds, in violation of federal securities laws. A class action has been filed against specialty pharmaceutical company American Pharmaceuticals Partners, Inc. (Nasdaq: APPX) and certain of its officers and directors by stockholders who purchased the company's common stock between February 19, 2002, and September 24, 2003. The parties have reached a $100 million administrative settlement in several actions filed against Janus Capital Group, Inc. (NYSE:JNS) and certain of its officers and directors on behalf of shareholders. The agreement between Attorneys General of New York and Colorado, and the Colorado Division of Securities relates to the company’s previously disclosed market timing admissions. Persons eligible to take part in the settlement should contact the prosecuting attorneys. On February 27, 2008, a stipulation and order was entered. As the case proceeds, a motion to consolidate cases 08-913, 08-1842, to appoint lead plaintiffs and counsels was filed on March 25, 2008. Hence, an order setting hearing and briefing schedules for the above mentioned motion was entered on April 01, 2008. As a result, the court entered its order granting the appointment of certain individuals and groups as lead plaintiffs, counsels and in the matter of consolidating cases on May 19, 2008.
The parties have reached a tentative $3.55 million settlement in an action filed against nuclear medicine company ADAC Laboratories, Inc. and Koninklijke Philips Electronics N.V. on behalf of stockholders who sold the company's stock in connection with the acquisition of ADAC with Koninklijke Philips Electronics N.V. via a November 2000 tender offer and subsequent merger. Persons eligible to participate in the settlement must file a proof of claim postmarked no later than May 4, 2004. The market timing scandal is affecting some of the largest mutual funds in the market. Several class actions have been filed against mutual fund manager Massachusetts Financial Services Company, its parent, Sun Life Financial, Inc. (NYSE:SLF) and certain of its officers and directors by all purchasers of shares of the MFS Mutual Funds during the period between December 15, 1998 and December 8, 2003. The actions claim that the defendants violated federal securities laws by allowing market timing sales by certain persons and entities. |
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