Firm, founder to settle mutual funds probe for $175 million

Thursday, May 20, 2004 | 11:08 a.m.

ALBANY, N.Y. -- Richard Strong, founder of Strong Capital Management Inc., was banned today from money management and fined $60 million in the harshest penalty imposed on an individual for improper mutual fund trading.

Strong, 62, reaped more than $1.6 million for himself and his family from short-term trades in his company's funds, according to New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. Strong Capital, based in Menomonee Falls, Wis., will pay $80 million and cut fees by $35 million over five years for allegedly allowing hedge funds to make trades that hurt other investors.

The SEC alleges in its complaint that Strong, who stepped down as chief executive in December, made 660 trades that violated fund prospectuses from 1998 to 2003.

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