BOSTON (AP) – Columbia Management, a unit of FleetBoston Financial Corp., has fired a portfolio manager for allowing improper trading in a mutual fund he managed. The company also acknowledged aso-called “sticky asset” arrangement in which investors were given improper trading privileges in return for making other investments.
In a letter to shareholders, the company also identified the three funds where improper trading took place, including one targeted at children. FleetBoston had previously disclosed that Columbia was likely to face charges related to improper “market timing” trades.
In a letter to shareholders, Columbia said the manager of its $400 million Small Company Equity Fund frequently traded through his own 401(k) account in that fund and others. Company spokesman Charles Salmans confirmed the identity of the trader who was fired as William Garrison. Garrison had no listed phone number in the Boston area.
Asked whether market timing privileges had been exchanged for other investments, Salmans said: “Did they agree to make certain levels of investment? The answer is yes.”
The other affected funds were the $371 million Newport Tiger Fund and the $855 Columbia Young Investor Fund, which targets young investors.
Columbia said the trading took place between 1998 and last year, but a “substantial majority” had ended by 2002. Salmans said he was unable to confirm a Boston Globe report Friday that market-timers were allowed to trade more than $100 million in funds.
“The market timing in these funds was extremely limited, given the size of our mutual fund portfolio overall,” Salmans said.
In its letter, Columbia said it would reimburse investors if it turns out they were harmed by the trading. It also outlined steps it has taken to prevent market timing, the rapid moving in and out of funds.
In the fourth quarter, FleetBoston set aside $50 million for legal contingencies, including the mutual fund investigations and a separate investigation into its stock-trading specialist unit.
Shares of Boston-based FleetBoston closed down 6 cents at $44.75 in trading Friday on the New York Stock Exchange. The company is awaiting final approval for a takeover by Bank of America.
