ALBANY, N.Y. (AP) — A former mutual fund executive pleaded guilty Thursday to a felony in the investigation of improper mutual fund trading that prosecutors said cost other investors billions ofdollars.
James P. Connelly Jr., former vice chairman and chief mutual fund officer at Fred Alger & Co., pleaded guilty to tampering with physical evidence, said New York Attorney General Eliot Spitzer and the Securities and Exchange Commission. Connelly had been accused of interfering with the continuing investigation of illegal trading in the mutual-fund industry.
Spitzer said Connelly deceived his firm’s lawyers by withholding documents and directing employees to delete some e-mails sought in the subpoena. Spitzer said Connelly, of Hoboken, N.J., also tried to conceal trading arrangements between his firm and Veras Investment Partners, a Texas hedge fund.
Connelly is the first mutual fund executive charged in the investigation. Two traders at other companies have been charged.
Under the plea entered Thursday in Manhattan criminal court, he faces up to four years in prison on the felony. Connelly also is barred from the industry for life.
He also agreed to pay a $400,000 civil penalty to settle related charges by the Securities and Exchange Commission.
In a statement late Thursday, Alger President Daniel Chung said Connelly was suspended Sept. 29. He was fired last week after an internal investigation turned up evidence that led to Thursday’s arrest, Chung said.
“Mr. Connelly’s misconduct was completely out of character for this firm and the personal commitment we made to the government to be fully cooperative,” Chung said.
Connelly’s home telephone number wasn’t available.
Veras, the hedge fund, confirmed Thursday it had received subpoenas from Spitzer and the SEC and said it is cooperating.
