Company: Bank One
Funds scandal costs Bank One $90m
|30th Jun 2004
|Bank One Corp has agreed to pay penalties of $90m after an inquiry into improper stock trading.
The US Securities and Exchange Commission and New York's attorney general both announced settlements with Bank One late on Tuesday.
Mark Beeson, ex-head of Bank One's mutual funds unit, was fined $100,000 and banned from trading for two years.
Bank One is set to complete its merger with JP Morgan shortly, creating the world's second biggest banking group,
The bank is the latest firm to reach a deal over improper trading by mutual funds, which are popular savings vehicles for small investors in the US.
At least 10 other US financial firms have agreed penalties with the SEC.
It estimates that payments have reached $2bn since New York's crusading attorney general Eliot Spitzer began investigating the mutual funds industry in mid-2003.
Other financial institutions that have settled with the SEC include Alliance Capital for $250m; Morgan Stanley for $50m; and Putnam Investments, the fifth biggest US mutual fund.
Bank One was fined $40m and promised to repay shareholders $10m in gains from market-timing, a practice in which institutions make short term trades to the detriment of long-term investors.
In addition, Bank One must shave $40m off its fees for mutual fund trading over the next five years.
"Bank One and Mark Beeson blatantly disregarded the well-being of One Group funds' long term shareholders," said Stephen Cutler, SEC director of enforcement.
Bank One and Mr Beeson accepted the penalties without admitting any wrongdoing.
The trading irregularities took place at the group's Banc One Investment Advisors unit, which said it has since tightened up its procedures.