Former Trust Company Ceo And President Plead Guilty
Attorney General Spitzer today announced that the former Chief Executive Officer and the former President of an Arizona based trust company have pleaded guilty to state criminal charges in connection with the ongoing investigation of illegal trading practices in the mutual fund industry.
Grant Seeger, the CEO of the Arizona-based Security Trust Company (STC), pleaded guilty today in New York County Supreme Court to second degree grand larceny, a class C felony, and to a violation of the Martin Act, a class E felony.
STC President William Kenyon pleaded guilty to a felony violation of the Martin Act.
According to his plea, Seegar admitted developing a procedure by which two hedge fund clients, Canary Capital and Samaritan Asset Management, disguised their market timing activities from various mutual fund families by attaching, or "piggy-backing," their trades to those of STCs retirement plan clients.
According to his plea, Kenyon also admitted that he oversaw the development of the software that allowed this trading activity and that, once the software was developed, he was responsible for implementing the trading strategy with the two hedge fund clients.
To date, the Attorney Generals office has obtained nine guilty pleas since the investigation of illegal trading in the mutual fund industry began two years ago. Settlements negotiated by the office with a dozen firms have brought about sweeping reforms of the industry and returned more than $3.1 billion to investors.
This case was prosecuted by Assistant Attorneys General Ricardo Velez and Stephen Antignani of the Criminal Prosecutions Bureau, under the direction of Laurie Israel, the Deputy Chief of the Criminal Prosecutions Bureau.