Bank One Exec Quits Amid Internal Probe
CHICAGO (AP) _ The head of the mutual fund unit at Bank One Corp. has resigned as part of several management changes made following allegations the company allowed improper trading, the bank said Wednesday.
Bank One chairman and CEO Jamie Dimon announced the actions in a note to employees and clients that was posted on an internal company Web site.
Dimon said an internal investigation found no evidence that Bank One or any of its employees had made illegal after-market trading arrangements. But he said the Canary Capital Management hedge fund, which is at the heart of a late-trading and market-timing scandal sweeping the mutual-fund industry, was given permission to trade the company’s 11 One Group funds ``more frequently than other customers″ _ an apparent reference to market timing.
``We regret that Canary was given special treatment,″ Dimon said. ``It should not have happened.″
Market timing, which aims to take advantage of short-term movements in stock prices with quick ``in and out″ trading of shares, violates the rules of most mutual fund companies. It can have a detrimental effect on the long-term shareholders for whom mutual funds are designed.
The scandal emerged earlier this year when New York Attorney General Eliot Spitzer subpoenaed dozens of mutual fund companies and a smaller number of hedge funds as part of an investigation into illegal trading he believes may have cost investors billions.
Last month, the hedge fund Canary Capital Management and its managers agreed to pay $30 million in restitution for profits generated from improper trading, plus a $10 million penalty to settle charges brought by Spitzer. The hedge fund neither admitted to nor denied wrongdoing in the settlement.
Spitzer alleged that Canary engaged in after-market trading and/or market timing with several mutual fund families, including One Group funds.
Dimon said Bank One will make full restitution to any One Group investors who are determined to have been financially harmed by the trading.
Two other investment funds pledged this month to make restitution. Bank of America Corp. said it will establish a restitution fund for shareholders of its Nations Funds who lost millions of dollars because of improper trading, and Janus Capital Group said it would return about $1 million in related fees.
The U.S. Securities and Exchange Commission has been investigating those named in Spitzer’s allegations.
At Bank One, Dave Kundert, 60, who heads the bank’s investment management group, was named to take over the mutual fund unit from Mark Beeson, 45. Dimon called it ``part of several changes″ in the senior management of the company’s investment management division.
The only other personnel action disclosed was that Norm Cook, an institutional managing director, will replace John AbuNassar as head of Institutional Asset Management.
Both moves are effective immediately, according to internal memorandums confirmed by Bank One spokesman Tom Kelly.
Bank One shares fell 10 cents to close at $41.60 on the New York Stock Exchange.