Dec. 18, 2003 — Alliance Cap Mgmt Holding L.P. (AC) said it would cut mutual fund management fees as part of a settlement with federal and New York State securities regulators over improper trading in the funds.
The company also agreed to a $250 million fine under the settlement with New York attorney general Eliot Spitzer and the Securities and Exchange Commission. The money will be used to set up a fund to compensate shareholders harmed by market-timing trades in the funds. The fine consists of $150 million in return of profits and a $100 million penalty.
Alliance will reduce fees on its open-end stock and bond funds by an average of 20% for at least five years, starting in January. The reduction translates into $70 million per year, Spitzer said.
Alliance said it expects to take a $140 million pre-tax charge in the fourth quarter in connection with the restitution fund. The company expects the fee reduction to lower earnings by an estimated $0.20 per share in 2004.