Bank of Hawaii Corp. said the Securities and Exchange Commission is considering legal action over improper mutual fund trades by a bank executive who was later fired.

The SEC recently notified several current and retired Bank of Hawaii managers that it is considering filing a civil complaint for allegedly failing to curb the improper trades in a timely way.

Al Landon, Bank of Hawaii's chief executive officer, said he doesn't believe the outcome of the SEC investigation will have an adverse effect on the bank, its customers or its employees.

The bank said it has strengthened its procedures for detecting and preventing such practices.

The SEC's notices stem from an investigation into alleged excessive and late market trades by a former employee in the New Asia Growth Fund. A Bank of Hawaii subsidiary serves as New Asia's investment adviser.

The company said the executive, who was not named, earned $110,000 between 2002 and 2003 by making excessive trades with New Asia fund shares.

The practice, known as "market timing," involves frequent short-term trades to take advantage of price swings in a fund's investments.

The bank said it expects to take a $3.8 million, pre-tax charge during the third quarter to cover the estimated legal and administrative costs related to the SEC investigation.

The company said there was no suggestion that recipients of the SEC notices profited from the alleged actions. It also agreed to reimburse the New Asia Growth Fund for losses and legal costs.

The SEC investigation is part of the federal agency's ongoing probe into practices in the nation's mutual fund industry.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.