Strong Capital Management shareholders will be reimbursed if the probe by New York State Attorney General Eliot Spitzer finds that the company traded questionably, the company said in a letter dated Friday.
Signed by Chairman Richard Strong, the letter also provided specific details regarding hedge fund firm Canary Capital Partners dealings with Strong. Not only did Canary have money in four of Strongs mutual funds, the company admitted, but it later poured $500,000 in a hedge fund directly affiliated with Strong, Reuters reports.
Spitzers probe has not yet charged Strong with any wrongdoing, as the rapid-fire trading technique Canary is alleged to have used is not technically illegal. However, the practice has come under such fire that all companies being investigated by Spitzer have conceded that they would reimburse shareholders in the event that negative information turns up.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.