The New York State Attorney General's office is not done with the fund industry yet. Deputy Attorney General Beth Golden warned attendees at a conference sponsored by Institutional Investor that "there is more to come" in the investigations, according to a report published by Dow Jones
Golden's comments appear to reflect statements made by Eliot Spitzer and others in his office during the past two months. Those comments suggest that the office is now focusing on fund boards and is mostly done with trading issues inside funds.
In her remarks, Golden said that fund directors and those who financed improper trades might be targets of additional enforcement. Paul Flynn, a banker at CIBC, has already been arraigned on charges that he financed Canary Capital Partners. Flynn pleaded not guilty to the charges and faces a scheduled November 1 trial date.
However, Golden also hinted that the office hopes to avoid bringing formal action against those targets. Instead, she encouraged attendees at the conference to insist on better fund governance and to voluntarily disclose fund trading costs, soft-dollar arrangements and management fees. She also reiterated that Spitzer would seek fee reductions in all settlements that he makes with fund firms.
Sean Hanna, Editor in Chief
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