The board of directors for the embattled mutual fund company told employees in a letter about the changes, positioned as “cost-cutting moves.” Impacted by the move will be the 2004 pension plan contribution that Strong would have paid in January 2005, while 2003’s contribution is still on track to be paid this month, according to a Milwaukee Journal Sentinel report.
“Our leading priority is to continue to deliver high quality service to our clients,” the letter said. “The current environment requires us to carefully, appropriately manage expenses in order to meet that objective.”
The move comes as the Menomonee Falls, Wisconsin-based company and its founder, Richard Strong, continue to fall under the investigative scrutiny of the US Securities and Exchange Commission (SEC), New York State Attorney General Eliot Spitzer and the Wisconsin Department of Financial Institutions for alleged improper fund trading. The company has acknowledged Strong engaged in some next-day transactions in his personal accounts, as well as those of friends and family. Those transactions are estimated to have yielded as much as $600,000. Meanwhile, Richard Strong has denied any wrongdoing, yet he stepped down as company chairman, chief executive officer and chief investment officer (See Trading Probes Muscle Out Strong, Putnam Chiefs ).
Spitzer has filed no civil or criminal charges against Richard Strong or the company, in which Strong owns a 90% stake. Strong has said his trading was not disruptive to the funds. But the repercussions from Spitzer’s allegations apparently pushed Strong into considering a sale of the company.
StrongCapital Managementrecently announced it hashired investment bank Goldman Sachs in a bid to sell the company. Strong currently manages about $40 billion, but says that $933 million left the firm in September and October.