Head of Bank of America funds out

I believe this suggests that the Mutual Funds fraud issue is potentially really big. Go Eliot Spitzer!

Head of Bank of America funds out

Robert Gordon leaves mutual fund department of No. 3 U.S. bank amid Spitzer probe.
September 12, 2003: 10:36 AM EDT

NEW YORK (Reuters) - Robert Gordon, the head of Bank of America Corp.'s mutual fund business who was accused by the New York attorney general of helping a hedge fund improperly trade mutual funds, has left the company, people familiar with the matter said Friday.

A woman answering a call placed to Gordon's office said: "He's no longer with the company."

Two of the three other Bank of America (BAC: up $0.06 to $75.66, Research, Estimates) employees named by Attorney General Eliot Spitzer in his probe -- Charles Bryceland, who ran the bank's New York brokerage for wealthy clients, and Theodore Sihpol, a broker in that office -- have also left the Charlotte, N.C.-based bank.

The departures stem from Spitzer's accusations that the No. 3 U.S. bank's Nations Funds unit helped Canary Capital Partners LLC, a hedge fund run by Edward Stern, illegally trade mutual funds on terms not available to ordinary investors. Secaucus, N.J.-based Canary has settled the matter for $40 million without admitting wrongdoing.

"It does look as if management is reacting very quickly to this, as it needed to" to help retain customers, said William Batcheller, who helps invest $28 billion for National City Investment Management Co. in Cleveland and owns Bank of America shares. "If people think the deck is stacked against them, they will not participate."

Gordon's departure shifts the focus to Rich DeMartini, the bank's head of asset management and one of its highest-paid executives, who made more than $7 million in salary, bonus, restricted stock and other compensation in 2002. DeMartini was also named by Spitzer in the complaint.

more: http://money.cnn.com/2003/09/12/news/companies/bank_america.reut/index.htm

Illegal trading appears rampant
By Thor Valdmanis, USA TODAY
NEW YORK — The alleged illegal trading that prosecutors are investigating at a few mutual fund firms might be more widespread and costly to investors than thought.
Illegal trading occurs in at least one out of every six mutual fund families and costs investors about $400 million a year, according to an academic study released Thursday.

The practice of "late trading" is so rife that individual shareholders lose about a nickel for every $100 invested in international funds, and over half a penny in domestic funds, according to the findings by Stanford University professor Eric Zitzewitz. The news is certain to bolster New York Attorney General Eliot Spitzer's claims that the mutual fund industry is rigged against small investors.

In addition to losses from late trading, individuals lose an estimated $5 billion a year from short-term traders, or "market timers," who legally exploit international- and small-cap stock funds at the expense of long-term shareholders. Zitzewitz and other academics estimate that 90% of mutual funds allow big clients to market time.

more: http://www.usatoday.com/money/perfi/funds/2003-09-12-trades-funds_x.htm

Hedgefunds, Day Traders, Crooks........and who all knows what are infesting our stock market.......

All in their own little Las Vegas type gambling game........ The average investor has no hope of knowing where their money is going in today's games. This needs to be cleaned up.......but I don't hear any of our candidates addressing Corporate Fraud and Crookery. And, Lieberman certainly wouldn't since he and Dodd were responsible for the loosining of the SEC regulations back in 93 and 94 and Lieberman never gets called down on it.....

:-)

That is, in lieu of real jail time. These people are CRIMINALS!

A small time bankrobber would get more punishment.

nt