Israel Englander, owner of the $5 billion Millennium Partners hedge fund, is in the process of settlement talks with New York Attorney General Elliot Spitzer and the Securities and Exchange Commission, Fortune reports.

Regulators accuse Englander of not properly supervising traders, who allegedly market timed and late traded $1 billion worth of mutual funds between 2000 and 2003. "Millennium is in trouble for creating entities, opening accounts [and] buying variable annuities for the sole purpose of deceiving mutual funds," a source told Fortune. However, Millennium spokesman, Thomas Daly said no fraud has been committed.

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