As the SEC nears a $675 million market-timing settlement with Bank of America, possibly this week, federal regulators are expected to charge two former executives at Columbia Management, the mutual fund arm of BoA, with permitting preferred customers to engage in abusive trading practices, the Boston Globe reports.
The SEC plans to bring civil fraud charges against James Tambone and Robert Hussey for their role in allowing some investors to market time Columbia's mutual funds, a practice discouraged in its prospectuses because it erodes long-term returns. In previous cases against individuals, regulators have sought expulsion from the industry as a form of punishment.
In March 2004, three top Columbia executives left the firm a month after it was implicated in the scandal. The trio included Tambone, then one of the company's co-presidents, the firm's Chief Operating Officer Joseph Palombo and Co-President Lou Tasiopoulos. Three other former Columbia employees, including Palombo, agreed to settle market timing-related charges with the SEC, according to the Globe.
Columbia, formerly the asset management subsidiary of FleetBoston, came under the bank's supervision following the Bank of America/FleetBoston merger approved last spring. Meanwhile, the SEC is expected to announce a final agreement in the coming weeks in a $675 million settlement with Bank of America over improper trading in its mutual fund business, the newspaper said.