The Office of the Comptroller of the Currency,
the Securities and Exchange Commission, and the New York Attorney
General today jointly announced a series of actions against Phoenix,
Arizona-based Security Trust Company, N.A. (STC) and three former
executives, arising from their participation in mutual fund late
trading and market timing schemes.
The NYAG announced criminal actions against STC’s
former chief executive officer, Grant D. Seeger; its former
president, William A. Kenyon; and its former senior vice president
for corporate services, Nicole McDermott.
The SEC announced the filing of civil fraud
charges against STC, Seeger, Kenyon, and McDermott.
The OCC announced that STC will begin a process
that will result in an orderly dissolution of the bank by March, 31,
2004. An order signed
today by the OCC, which is the bank’s primary regulator, requires
the bank to take steps to ensure that the trust accounts and
investment plans it administers experience the minimum disruption
possible. The OCC also took an enforcement action against STC last
month requiring the bank’s controlling shareholder, Capital
Management Investors Holdings, Inc. (CMIH), Chicago, Illinois, to
provide a substantial capital infusion and make a general pledge of
its assets that ensures the bank will have sufficient funds
available for an orderly dissolution.
The Labor Department’s Employee Benefits Security
Administration, which enforces provisions of the Employee Retirement
Income Security Act that are designed to protect retirement and
employee benefit plans, also participated in the OCC
investigation.
An investigation by the New York Attorney
General's office implicated Security Trust in certain improper and
illegal activities, including late trading and market timing, and
triggered an investigation by the other agencies.
“I want to
thank the OCC, SEC and Labor Department for their excellent
assistance and cooperation on this case,” said New York Attorney
General Eliot Spitzer. “Coordination by regulators is imperative in
ensuring that individuals and corporations are held accountable for
misdeeds, and this case shows how that can be
accomplished.”
“This action is an impressive example of
cooperation between state and federal government agencies,” said
Comptroller of the Currency John D. Hawke, Jr. “Everyone involved
displayed a high degree of professionalism and dedication, and acted
in the best interests of the American people.”
“Financial intermediaries
who illegally permit their customers to trade mutual fund shares at
the expense of long-term investors violate the securities laws and
will be held accountable,” said Stephen M. Cutler, Director of the
SEC's Division of Enforcement. “Today's important action was a
product of swift investigation and effective cooperation by federal
and state agencies alike.”
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Media Contacts
OCC
Bob Garsson
(202) 874-5770
NY AG
Darren Dopp
(518) 473-5525
SEC
John Nester
(202) 942-0020
DOL
Ed Frank
(202) 693-4676