GoldK, a Waltham, Massachusetts-based firm, which provides a recordkeeping platform for third-party administrators, announced Monday that it was taking the action “to protect the interests of (our) clients and their retirement plan participants.”
According to the GoldK announcement, other trustees and custodians have agreed to take on the trustee/custodian clients from STC.
STC was implicated by New York State Attorney General Eliot Spitzer as part of a market timing and late-day trading scheme involving hedge fund Canary Capital Partners (See Spitzer Fund Abuse Probe Pumps Out More Subpoenas).
While Spitzer named just four mutual-fund companies in a lawsuit, Canary potentially had access to trading with thousands of different funds through the STC facilities, based in Phoenix, according to a Wall Street Journal. STC provides an electronic system to handle mutual-fund trades for participants in retirement plans as well as institutional investors and financial advisers.
Spitzer alleged that STC gave Canary the ability to trade funds as late as 9 p.m. Eastern time at prices that shouldn’t have been available after the 4 p.m. close of market trading. Such trades were so profitable to Canary that STC eventually demanded and received 4% of Canary’s gains, Spitzer charged.
Grant Seeger, STC chief executive, declined to comment on the details of the attorney general’s lawsuit to the Journal, except to say that STC was fully cooperating with the investigation. STC wasn’t charged with any wrongdoing in Spitzer’s complaint.