The departures leave a vacuum at the top of Columbia Management Group: Tambone and Tasiopoulos served as co-presidents and Palombo was the firm’s chief operating officer. Columbia’s parent FleetBoston Financial Corp’s Columbia officially fired the trio earlier this week, according to a Dow Jones report.
However, the decision was not completely unexpected. The three were placed on administrative leave last month (See FleetBoston Places Embattled Managers on Leave).
The move by the Boston-based financial conglomerate comes after a $675 million settlement was reached with New York Attorney General Eliot Spitzer and the US Securities and Exchange Commission (SEC) and Fleet’s merger partner Bank of America Corp earlier this week (See BofA, Fleet Come to Terms with Spitzer, SEC in Fund Probe ). Regulators had filed civil fraud charges against the Columbia mutual fund unit alleging senior executives at Columbia approved clandestine agreements to let sophisticated investors trade rapidly in mutual funds at the expense of ordinary shareholders.
In January, the company disclosed that the SEC was preparing to charge two of its Columbia funds units for allegedly misleading investors about its market-timing policies and practices (See Fleet Unit Receives SEC “Wells Notice” ). In its disclosure, Fleet said the “majority” of trades were in just three funds, Columbia Newport Tiger Fund, Columbia Growth Stock Fund and Columbia Young Investor Fund, a portfolio aimed at helping children and teenagers save money.
The trading arrangements in question began in the funds when they were owned by Liberty Financial, which Fleet purchased in 2001, but continued after the acquisition. Regulators said traders engaged in $2.5 billion of market timing transactions in at least seven mutual funds from 1998 to the summer of 2003 at Fleet’s Columbia Funds and its predecessors. Columbia chief executive Keith Banks said the company had accepted about $147 million in market timing money at peak moments, and that the damage to shareholders amounted to about $25 million (See Investors Market Timed $100M in Fleet Funds ).
« Missouri Fund Sacks Paribas Capital for UN Connection