Spitzer's Seligman Investigation Advances
The court filing cites previously undisclosed evidence of market timing and asks the court to order the production of additional information regarding market timing activities at Seligman, according to the announcement .
Spitzer claims that evidence shows at least a dozen secret mutual fund timing arrangements approved by Seligman’s senior management. According to the announcement, Spitzer says at least one arrangement was approved by the company’s current president.
In the court filing, Spitzer said that the existence of the arrangements was well-known within the company and compliance officials warned senior management about them. In one e-mail, a compliance official said, “[Market timing] is a ticking time bomb for the entire mutual fund industry, set to go off the day the press realizes that fund companies routinely sell the returns earned by the shareholders of their funds to short-term traders.”
Spitzer said management continued to allow the arrangements despite the warnings.
The Attorney General also seeks to review the way Seligman set fees and expenses for its funds. Seligman is the nation’s fifth most expensive family of funds, and in some instances, the company charges its retail fund customers more than twice what it charges institutional customers for the same services, according to the announcement.
Seligman has previously paid $2 million in restitution for market timing instances it found in some of its mutual funds (See Seligman Kicks in $2 Million after Internal Review ).
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