The Securities and Exchange Commission and New York Attorney General Eliot Spitzer have charged Gary Pilgrim, Harold Baxter and Pilgrim-Baxter & Associates with securities fraud and civil charges, respectively. Spitzer’s suit says the executives permitted a hedge fund, a broker/dealer and other clients to make illegal trades in the PBHG mutual fund family.

"The top managers of this mutual fund lost their ethical compass and were unable to distinguish between what was in their shareholders’ interest and what was in their own interest," Spitzer said in a release.

He is asking the company to return $250 million in fees, and perhaps more, and both he and the SEC are seeking to ban Pilgrim and Baxter from the securities industry.

The two executives quit their positions last Thursday when an internal probe by parent company Old Mutual turned up questionable trades and the firm became aware of the pending charges.

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