New York Attorney General Eliot Spitzer filed a lawsuit against J.W. Seligman and its president, Brian Zino, on Tuesday in the New York Supreme Court, charging the company with entering into “rampant” market-timing arrangements. The suit also names Seligman’s fund distributor and shareholder services agent.

The lawsuit seeks injunctive relief, disgorgement of fees and profits, restitution and penalties.

Last year, Seligman disputed Spitzer’s charges that extensive market timing occurred at the company, saying that it had uncovered only four instances of such activity and that they cost investors $2 million.

Spitzer followed up with a court order requiring the company to provide documents and make employees available for deposition. As a result, Spitzer uncovered 35 additional market-timing agreements, one of which permitted an investor to conduct 400 market-timing trades in six Seligman funds.

“While it is certainly within a company’s rights to continue to contest the evidence, the record shows that there was a clear breach of fiduciary duty at Seligman and that the company’s damage estimates are inadequate,” Spitzer said.

Spitzer found that the four instances of market timing occurred between 2001 and 2003. Once Spitzer obtained records dating back to 1998, he uncovered the additional agreements, and, as a result, he called the company’s internal investigation between 2001 and 2003 disingenuous because it focused on a conveniently limited time frame.

Spitzer also discovered that a number of Seligman’s senior managers were aware of the market timing and its harmful effect on investors.

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