Strong Capital says it will reimburse investors hurt by alleged illegal trading
Sunday, September 28th 2003, 12:00 am
By: News On 6
MILWAUKEE (AP) _ Strong Capital Management Inc. said it will reimburse investors in four of its mutual funds if it finds they were hurt by a New Jersey company's alleged illegal trading practices.
New York Attorney General Eliot Spitzer announced earlier this month that hedge fund Canary Capital Partners LLC had agreed to pay $40 million to settle allegations it engaged in illegal trading practices with mutual fund companies, including Strong.
In exchange for big-money investments, Spitzer said, several mutual funds bent the rules applied to most investors and allowed Canary to make after-hours trades and short-term ``in and out'' deals.
The complaint alleges Strong gave Canary advantages over other shareholders in exchange for commitments from Canary to keep as much as $18 million in a Strong brokerage account to trade Strong funds, and to keep an unspecified amount of ``substantial additional assets'' in Strong hedge funds.
Menomonee Falls-based Strong will ``make the appropriate reimbursement if it is determined that the Canary transactions adversely affected investors in the four funds referenced in the complaint,'' chairman Richard S. Strong said Friday in a letter posted on the investment firm's Web site.
The privately held company had remained silent for three weeks on whether it would reimburse investors.
The announcement ``took longer than we would have hoped,'' Paul Herbert, a mutual fund analyst at Morningstar Inc. in Chicago.
The Strong letter does not address the allegation that the firm gave Canary lists of portfolio holdings that weren't available to other fund shareholders.