The regulator is expected to charge former executive James Tambone and former sales official Robert Hussey with fraud related to undisclosed agreements that allowed certain investors to market-time the former bank’s Columbia funds unit, according to the Boston Globe. Three other Columbia employees – Joseph Palombo, Erik Gustafson, and Peter Martin – are all expected to settle for cash fines and suspensions.
FleetBoston was bought out by Bank of America in March, and at that time the new entity struck a preliminary deal with the SEC worth $675 million (See BofA, Fleet Near Settlement With SEC, Spitzer ). This figure is not expected to be changed when the SEC announces that a final deal has been reached, according to the Globe. The $675 million is comprised of $195 million in penalties, $320 in retuned profits, and a $160 million tag in fee reductions as part of a separate agreement with New York Attorney General Eliot Spitzer.
The settlement would be the largest one in dollar terms since regulators started to crack down on mutual fund late trading and market timing in September 2003, according to the Globe. In total, over $3 billion in fines have been collected over the affair that rocked the mutual fund world.
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