Nov. 11–In his first interview since the New York attorney general in early September raised questions about improper trading at his firm, Richard S. Strong told Fortune magazine he is through”grieving” over the problems he and his investment company face.
“I didn’t sleep for 53 days straight,” said Strong, founder and chairman of Strong Financial Corp. in Menomonee Falls. “I’ve been grieving. It’s like losing someone. Grieving. But six days ago, I just stopped. I got over it. Time to move on. I had to go through the grieving, but now that’s done.”
Portraying Strong as a man under siege who can’t decide which sandwich to order at a local restaurant, the story doesn’t break any new ground in terms of the allegations against Strong and his firm. But it represents the first time Strong has spoken to the press since early September and includes his plea for understanding.
“Please, when you are writing, I ask you to consider our company — and consider our dreams,” Strong says in the story.
Strong’s challenges began in early September, when New York Attorney General Eliot Spitzer implicated his company, but did not charge it, in a scheme to allow a New Jersey hedge fund to trade in and out of five of its mutual funds more often than other shareholders. In exchange, Spitzer said, Canary Capital Partners LLC deposited money — Strong has since said $500,000 — in Strong’s hedge funds.
Then on Oct. 30, Spitzer’s office leaked information suggesting Strong himself had a shot at becoming the poster child for mutual fund industry excess — and Spitzer’s biggest catch. Spitzer’s staff said it plans to take action — it didn’t rule out criminal charges — against Strong himself for allegedly profiting by about $600,000 for himself, family and friends by making improper trades in and out of funds managed by his company.
Strong has said his trades weren’t “disruptive” to fund shareholders, but others have said he should have been focused on his fiduciary responsibility to shareholders rather than on how to skim money from their holdings.
Strong, through a spokeswoman, declined to talk to the Journal Sentinel for this story.
“Over the years, we have built a great team with deep management expertise, and we have put a solid management structure in place,” Strong said in an Oct. 30 press release announcing he would reimburse the funds he traded in for any losses if they were discovered.
“Everyone here has great respect for the enormous responsibility our clients have entrusted in us to manage and care for their investments. That commitment will be maintained and carried out for years to come,” he said.
The Fortune story, though, is full of punches at Strong by high-level ex-employees such as his former partner William D. Corneliuson; John Dragisic, former president of Strong Capital Management; and Rochelle Lamm, former president of Strong Advisory Services, that contradict the little he has offered in his statements.
The story says Strong had assembled a very capable management team in the mid-1990s, but most of them are no longer at the firm. And the writers say the problem was that Strong hadn’t changed the thing that most needed changing: himself.
Strong is too eager to jump on trends, too infatuated with big new hires, too insulated in his own power, and too willing to fire everyone but himself, the story says.
“Dick always pushes the envelope,” Corneliuson told Fortune.
Strong, according to the story, tried to convince the Fortune reporters he’s different from everyone else, and that makes it difficult to understand him.
“Can you understand someone who is different?” he asked the Fortune reporters. “It is difficult. I ask you please to try.”
For a full text of the Fortune magazine story, go to www.fortune.com. The story will appear in the Nov. 24 issue of the magazine, which is at newsstands Nov. 17.
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