The SEC announced the deal Thursday with Great American and former senior vice president, William C. Thater of allegations Thater allowed and the firm failed to stop late trading of mutual funds underlying one of General American’s variable insurance products.
According to the SEC announcement, General American will pay a civil penalty of $3.3 million and Thater will pay disgorgement, prejudgment interest and civil penalties totaling $163,137.
The SEC alleged that Thater, 52, of Danbury, Connecticut, entered into a written agreement that gave a New York family exclusive late trading privileges in mutual funds underlying the private placement life insurance policies the family purchased from General American for approximately $20 million.
The commission found that from February 1, 2002, to November 18, 2002, the New York family submitted, confirmed, or cancelled 79 mutual fund trade requests after 4 p.m. Eastern Time. As a result, the SEC said, the value of the underlying mutual funds was diluted by approximately $3.3 million.
Regulators charged that General American personnel became aware of the agreement and the late trading activity, but did not properly investigate the deals and stop them.
More information on the case is here .
« UBS Takes Active Approach to Target Date Funds