Mutual Funds Probe - Investigations Grow

As the number of firms dragged into the investigations into US mutual fund trading practices grow, CityNews looks at the latest developments.

Bear Stearns has now confirmed that it has received a subpoena for information from New York State Attorney General Eliot Spitzer's office in connection with his on-going probe. The Wall Street firm has also said that has fielded a 'voluntary request for information' from US regulator The Securities and Exchange Commission.

Although not named as one of the three companies cited in Spitzer's original 3rd September complaint in respect of mutual funds trading abuses, Bank One has departed company with two executives. The bank's mutual funds chief has quit and one other fund executive has said to have departed. Bank One is still undertaking its own internal investigation to establish whether staff engaged in any improper mutual funds trading activity.

Meanwhile Massachusetts Secretary of the Commonwealth William Gavin has widened his own probe into the affair. In addition to his investigation into Prudential Securities, he is also said to be probing Morgan Stanley and Fidelity Investments.

And finally, the first executive has now been charged over the investigations. James Connelly Jr, a former executive at Fred Alger Management, pleaded guilty in the Supreme Court of New York State to felony criminal charges of obstructing the investigation into the probe.

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