Phoenix-based Security Trust Company, N.A. participated in late trading and market timing with the maligned hedge fund Canary Capital, the Securities and Exchange Commission charged in a Phoenix federal district court Tuesday. New York Attorney General Eliot Spitzer also pressed grand larceny charges of his own.
Former officers, including CEO Grant D. Seeger and President William A. Kenyon, were named in the suit, which alleges that a group of related hedge funds, the Canary Capital funds, were allowed to trade improperly and sometimes illegally under the top officials watch. Canary Capital, controlled by Edward J. Stern, has already settled another charge with Spitzers office for $40 million stemming from trades with, among others, Janus, Strong and Bank One.
Among other transgressions, the SECs charges contend that between May 2000 and July 2003, 99% of Security Trusts trades with Canary took place after the 4 p.m. deadline.
"Today's important action was a product of swift investigation and effective cooperation by federal and state agencies alike," Cutler said. Ex-Security Trust SVP for Corporate Services Nicole McDermott was also named in the fraud suit.