Zions First National Bank is a subsidiary of
The resignation follows allegations by state lawmakers that a conflict of interest existed by virtue of Zions management of the Aquila Utah municipal bond fund. Zions had led support for the passage of legislation that would have removed the state tax-exempt status of income received from municipal bonds issued outside of Utah, giving Utah residents an incentive to purchase only municipal bonds issued in Utah.
Currently, Utah and Indiana are the only states that offer their residents tax exemptions for out-of-state municipal bond income.
The bill was vetoed by Utah Governor Mike Leavitt late last month.
Aquila is currently exploring alternatives to continue local portfolio management of the fund, including bringing the funds management in-house, said Diana Herrmann, president and chief operating officer of the fund group.
Aquila, which advises five single-state muni funds, two regional equity funds and five money funds, only manages three of its own funds. The single-state funds and one of the regional funds are sub-advised by managers in the regions in which the funds invest.