Alliance Capital Execs Forced Out by Trading Scandal

November 10, 2003 ( - The ripples of the Canary Capital Partners' mutual fund trading scandal continue to ripple across the financial services industry as two high-ranking officials at Alliance Capital Management LP have stepped down under pressure.

According to an Alliance news release, John Carifa resigned as president, chief operating officer, and director of Alliance Capital and as chairman of the board of its mutual funds. In addition, Michael Laughlin has moved aside as chairman of Alliance Capital’s mutual fund distribution unit.

Lewis Sanders, Alliance Capital’s chief executive officer, said in a statement that he and the Alliance board had requested the two men’s resignations because of their involvement with “inappropriate” market timing including some transactions that hurt the company’s fund shareholders.

“Our supervisors’ utmost obligation to protect the best interests of our clients cannot be compromised at any level of the firm or for any reason,” Sanders said in the statement. “A strong compliance culture ensures this result and to that end the special committee of independent directors will, under an explicitly expanded mandate, oversee and direct a thorough review of the firm’s compliance procedures and controls as well as its governance structure.”

According to Lieberman’s statement, the company will continue to cooperate with the investigations now underway by the US Securities and Exchange Commission, New York State Attorney General Eliot Spitzer, and other state securities agencies.   “There is a high likelihood that Alliance Capital will face sanctions and penalties as the firm works to bring this matter to a close,” Sanders said. “Importantly, Alliance Capital is committed to full restitution to investors of the adverse effects that market timing had on the firm’s mutual funds and the special committee of independent directors will oversee this effort as well.

Alliance Capital also announced today that it has made three key management appointments:

  • Gerald Lieberman will become a director of Alliance Capital and the firm’s chief operating officer. Reporting to Lieberman will be finance, technology, human resources, facilities, and operations units including those supporting mutual funds. Lieberman joined Bernstein in 1999 prior to its combination with Alliance as its chief financial and administrative Officer. Lieberman will report to Sanders.
  • Marc Mayer, currently head of the firm’s Institutional Investment Management Sales and Marketing unit, will assume the leadership of Alliance Capital’s mutual fund business, reporting to Sanders. Mayer’s career includes extensive experience on both the product and marketing sides of the industry. He joined Bernstein in 1989 as a research analyst in pharmaceuticals, coming from Bristol Myers Squibb.
  • David Steyn has been appointed head of Alliance Capital’s Institutional Investment Management Sales and Marketing unit. Steyn joined the firm in 1999 as the co-head of Bernstein’s London office.

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