A federal judge has dismissed a lawsuit by the Securities and Exchange Commission against two executives at a Citigroup transfer agent who realized nearly $100 million in savings from an affiliated transfer agent but kept the profits for the company rather than to lower fund expenses, The Wall Street Journal reports.

U.S. District Judge Richard C. Casey ruled in favor of a summary judgment motion filed by Thomas W. Jones, the former CEO of Citigroup Asset Management, and Lewis E. Daidone, the former treasurer and chief financial officer of the Smith Barney family of funds.

Since August, 2005, the SEC had sought penalties and disgorgement from the two, as well as permanently banning them from the industry. But the judge ruled that the legal time period had run out and that the SEC had failed to make its case.

“The Commission’s action for civil penalties and an injunction are time barred, and its action for disgorgement is not supported by sufficient facts,” Judge Casey said.

But the SEC said that Jones and Daidone were “principally responsible” for sending business to an affiliated transfer agent of the Smith Barney funds, where the funds got a sizable discount that amounted to millions of dollars. Citigroup settled with the SEC in May 2005 and agreed to $208 million in disgorgement, although it didn’t admit or deny wrongdoing.

An SEC spokesman told the Associated Press that the Commission is disappointed with the ruling and may appeal.

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