Court Rules Vs. Defendants in Market Timing

Jack Humphrey, Regulatory journalist
May 11, 2012 /

The US Securities and Exchange Commission announced that a Massachusetts federal court entered final judgments by consent against James Tambone and Robert Hussey, defendants in a case filed by the Commission on May 19, 2006.

The Commission alleged in its complaint that from 1998 through 2003, Tambone and Hussey, two senior executives at Columbia Funds Distributor, Inc., the underwriter for the Columbia complex of mutual funds, allowed certain preferred customers to engage in frequent short-term trading in certain Columbia mutual funds in contravention of the prospectuses that represented that the funds did not permit, or were otherwise hostile to, market timing or other short-term or excessive trading.

Without admitting or denying the allegations in the Commission’s complaint, Hussey consented to a final judgment entered by the Court on April 13, 2012 and Tambone consented to a final judgment entered by the Court on May 7, 2012.

The final judgment ordered Hussey to pay disgorgement in the amount of $37,500, plus prejudgment interest in the amount of $20,980, and a civil penalty of $75,000, for a total amount of $133,480. The final judgment ordered Tambone to pay disgorgement in the amount of $26,687, plus prejudgment interest in the amount of $15,344.38, and a civil penalty of $75,000, for a total amount of $117,031.38.

On March 19, 2012, the parties stipulated to dismiss the claim in the complaint alleging that Tambone and Hussey aided and abetted violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The claim in the complaint alleging direct violations of Section 10(b) and Rule 10b-5 was dismissed earlier in the litigation.

 

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