More Heads Roll at Security Trust

October 31, 2003 ( - The mutual fund trading scandal has claimed more victims.

Security Trust, the Phoenix, Arizona-based retirement plan trustee/custodian that has occupied a prominent role in the mutual fund trading scandal, has now ousted its president and laid off more than two dozen others, according to a report on The company also laid off two other top executives, Nicole McDermott, a senior vice president, and Jay Marran , an executive who managed the company’s fund compliance division.

The ouster of William Kenyon as Security Trust’s president comes just weeks after the company pushed aside Grant Seeger as its chief executive officer. Seeger was dumped after New York State Attorney General Eliot Spitzer’s office alleged in September that the firm helped several hedge funds, including Canary Capital Partners, engage in improper trading in shares of various mutual funds. STC claims other customers didn’t get hurt by its trading practices (See STC: Canary Trades Didn’t Harm Other Clients ). Earlier this month Seeger was replaced on an interim basis by Thomas Plumb, who was most recently chief executive of PlanAnalytics Inc., a Mendota Heights, Minnesota-based consultant for financial advisors.

In reaching a $40-million settlement with Canary, Spitzer’s office alleged that Security Trust allowed the hedge fund to make improper trades in shares of hundreds of mutual funds. In exchange, Security Trust allegedly received a cut of Canary’s illicit profits (See Spitzer Fund Abuse Probe Pumps Out More Subpoenas ).

The Web site said Spitzer is leaning toward filing criminal charges against Security Trust, which serves as a custodian and trustee for more than 2,500 retirement plans with $13 billion in assets.