ALBANY, N.Y. -- Mutual fund company founder Richard Strong was banned for life from the financial world and agreed to pay $60 million to settle allegations of improper trading, becoming the highest-level executive brought down in the scandal that has engulfed the industry.
His company, Strong Financial Corp., will pay $115 million in settlements with New York and Wisconsin and the Securities and Exchange Commission. Two other executives at the firm also accepted lifetime bans from the industry.
Strong acknowledged trading shares of his company's mutual funds while advising investors to hold them for the long term. He was also accused of engaging in a practice called market timing for personal gain.
"Throughout my career, I have considered it to be my sacred duty to protect my investors; and yet in a particular and persistent way I let them down," Strong, who resigned in December as chairman, CEO, and chief investment officer, said in a written apology required under the settlement.
The SEC and state regulators have been investigating trading abuses at several mutual fund companies, including market timing -- a type of rapid, in-and-out trading that can hurt long-term shareholders.
The scandal has prompted firings and resignations at several big-name companies and led to criminal charges, subpoenas, and hundreds of millions of dollars in penalties.
Strong owns 85 percent of the Menomonee Falls, Wis., company.
"You can't get any higher than the fellow who is CEO and chairman of the board and that's why his behavior has always struck as that much more egregious," said New York Attorney General Eliot Spitzer, who has led the investigations.
Strong Financial also agreed to reforms that include new standards for board independence and accountability at the mutual fund company. In addition, the company will reduce its fees to Strong shareholders by 6 percent for five years, a reduction valued at $35 million.
"Investors in Strong funds did not always get treated equally and fairly as they had the right to expect," said Wisconsin Attorney General Peg Lautenschlager. "The settlement also ensures worthwhile reforms, while giving the company a positive opportunity to address its future."