Banc One investment unit to pay $50M in settlement

By Christine Dugas
USA Today

Banc One Investment Advisors agreed yesterday to pay $50 million in penalties and restitution and reduce its mutual fund fees by $40 million to settle charges that it permitted improper fund trading.

Under the terms of the settlement with the Securities and Exchange Commission and New York State Attorney General Eliot Spitzer, BOIA, the investment advisory unit of Bank One, will pay $10 million in restitution and $40 million in penalties.

In a separate agreement with Spitzer's office, the company also agreed to cut fees by $40 million over five years.

The settlement also calls for Mark Beeson, former CEO of One Group mutual funds and senior managing director of BOIA, to pay a civil penalty of $100,000. Beeson agreed to a two-year ban from the mutual fund industry and a three-year prohibition on serving as an officer or director of a mutual fund or investment adviser.

Procedures are now in place to protect "mutual fund shareholders and prevent a recurrence of similar issues in the future," David Kundert, BOIA chairman and CEO, said in a statement.

The announcement was made just days before Bank One is scheduled to complete its merger with J.P. Morgan Chase, which would create the No. 2 U.S. bank.

The charges against BOIA came to light in September when Spitzer settled charges with hedge fund Canary Capital Partners that it engaged in mutual fund trading irregularities with Janus Capital and Strong Investments and the mutual fund arms of Bank of America and Bank One.