Bank of Hawaii worker loses job

By Debbie Sokei
Advertiser Staff Writer

A Bank of Hawaii employee lost his job after he was caught improperly investing in a mutual fund operated by the bank, the bank said yesterday.

The bank discovered the employee was engaged in "market timing" with one of the Pacific Capital Funds, for which the bank acts as an investment adviser, said Stafford Kiguchi, spokesman for the bank. The employee made about $100,000.

Market timing involves frequent short-term trades to take advantage of price changes in a fund's underlying investments. Although market timing is not illegal, Kiguchi said some mutual-fund policies limit the number of transactions a person can perform and the former employee exceeded that number.

"That is important because mutual funds are intended to be bought and held for long periods of time," Kiguchi said. "If there is excessive trading it makes it more expensive to run the fund."

Kiguchi would not elaborate on the details of the case since it is a personnel matter but said the illegal investment did not involve any client funds and the employee was not working in the investment advisory area of the bank at the time.

Patrick Murphy, spokesman for the Securities and Exchange Commission San Francisco District Office, could not confirm nor deny if they are investigating.

In early September, scandals over "market timing" and late trading, where funds are traded after the close of the market, erupted in the $7.1 trillion fund industry. Two fund firms in particular, Putnam Investments and Janus Capital Group Inc., had their reputations damaged and suffered a series of redemptions.

Reach Debbie Sokei at 525-8064 or dsokei@honoluluadvertiser.com.