News Flash- Scandal Claims Two Firms
December 8, 2003
Security Trust Corp., the Phoenix-based firm whose three top officials were charged with felonies by New York Attorney General Eliot Spitzer, will be shut down effective March 31, 2004.
The Securities and Exchange Commission and state authorities ordered dissolution of the 134-employee company, which acts as an intermediary for mutual funds and retirement plans. This comes just days after Spitzer charged the former CEO, president and vice president with larceny, falsification of business documents and securities fraud in its dealings with maligned hedge fund giant Canary Capital. Reports estimate the company made $5.8 million in improper hedge-fund trades.
In a related but less-publicized story, Texas-based hedge fund Veras Investment Partners shut itself down last month immediately after it received subpoenas from the SEC and Spitzer's office. Veras reportedly returned between $400 million and $500 million in profits.
Veras owner James McBride and executive Kevin Larsen would not offer a comment through their lawyers. Veras allegedly timed Fred Alger Asset Management Inc. funds through the assistance of James Connelly, Jr., Alger's former vice chairman. Veras reportedly dealt with other mutual funds; a Federated Investors internal audit indicated Veras was involved in 15 of Federated's 100 instances of improper trading.
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