The former chairman and the president of Security Trust Company pled guilty Tuesday in New York County Supreme Court to state criminal market-timing and late-trading charges.
Security Trust was the back-office trust company at the heart of New York Attorney General Eliot Spitzer's original case against Canary Capital.
Grant Seeger, the Phoenix, Ariz., firm's former chief executive officer, and William Kenyon, Security Trust's former president, pled guilty. Seeger admitted he committed second-degree grand larceny and violated the Martin Act. Kenyon admitted to violating the Martin Act.
However, their attorneys noted that neither will serve time in prison and stressed that market timing was rampant throughout the brokerage industry. Further, each executive will pay a $50,000 fine.
"The worth of this case is shown by the results of the plea negotiations in that neither defendant is going to spend a day in jail," Henry Mazurek, Kenyon's attorney, told the Associated Press.
Seeger's attorney, Susan Necheles, stressed that the two executives merely set up the accounts and did not conduct the illegal trades. "That was going on through every brokerage firm in the country," she said. "No one thought it was criminal at the time."
To date, Spitzer has obtained nine guilty pleas on illegal trading and spearheaded $3.1 billion in fees and restitution. His investigation into Security Trust and its role in helping Canary Capital and another hedge fund, Samaritan Asset Management, place illegal trades in mutual funds, continues.
The case against Seeger and Kenyon was prosecuted by Assistant Attorneys General Ricardo Velez and Stephen Antignani of the Criminal Prosecutions Bureau. Laurie Israel, deputy chief of the Criminal Prosecutions Bureau, oversaw the case.