Bank of America’s top mutual fund executive, Richard DeMartini, will leave its scandal-tarred money management unit once the Charlotte, N.C., bank buys FleetBoston Financial Corp., bank officialssaid yesterday.
DeMartini, tied to the market-timing and late-trading scandal with the Canary hedge fund group, will follow several other ousted Bank of America Nations Funds managers. He will be replaced by a Fleet executive, Brian Moynihan.
Apart from those changes, though, analysts said the scandal that has rocked the fund industry will likely have minimal impact on the combined company.
Meanwhile, Kenneth Lewis, Bank of America’s chief executive, said he might keep the name of Fleet’s funds, Columbia, and use it for Bank of America’s funds. Moynihan will run the asset management business out of Boston. “I like the Columbia name,” he said. “At least some if not all (the funds) could be named Columbia.”
David Kathman, a Morningstar Inc. analyst, said buying Fleet’s untarnished funds could give Bank of America a fresh start.
“Dealing with the scandal has got to be one of the top priorities,” Kathman said. “They don’t want to taint the Columbia funds.”
New York Attorney General Eliot Spitzer accused Nations Funds executives last month of cutting deals with the Canary hedge fund to permit illegal late trading and improper market-timing of fund shares.
Lewis has vowed to reimburse Nations Funds for any losses.
“It seems to me he squared right up to that and was outraged more than anybody,” said Charles K. “Chad” Gifford, Fleet’s CEO. Fleet lawyers figure that the scandal won’t present future problems.
Several analysts agreed with that assessment yesterday. They said the mutual fund unit represents just a small portion of Bank of America’s overall business.
