Ken Lewis, Bank of America chairman and chief executive, has started
dismissing employees tied to New York attorney-general Eliot Spitzer's
investigation of malfeasance in the mutual fund business, people
familiar with the situation said.
Mr Spitzer last week announced a
$40m settlement with a hedge fund run by Edward Stern, son of pet food and
real estate billionaire Leonard Stern, that he said improperly traded shares
in mutual funds operated by Bank of America, Bank One, Janus and Strong.
But Mr Spitzer singled out Bank of America's role, saying the company
was "essentially being bought off" by the hedge fund, Canary Capital
Partners.
Last week Mr Lewis said that if an internal investigation
showed that Mr Spitzer's allegations were true, he would not hesitate to
fire anyone involved, regardless of how much revenue they generated.
While a spokesman declined to comment, it is understood that the bank
has dismissed at least two people listed in Mr Spitzer's complaint
against Canary: Charles Bryceland, who formerly ran the bank's private
banking office that catered to wealthy New Yorkers; and broker Theodore
Sihpol, who reported to Mr Bryceland.
The fate of two other executives
mentioned in Mr Spitzer's complaint, including Richard DeMartini, head of
the asset management division and one of the bank's top managers, and Robert
Gordon, chief executive of Banc of America Capital Management, could not
immediately be determined.
Last week Mr Lewis told reporters that he
would act quickly to resolve the situation through an internal investigation
but did not intend to act until he could make a fair decision based on
reports from his staff.
A call to Mr DeMartini was not returned. Mr
Gordon could not be reached. Mr Sihpol declined to comment. A call to Mr
Bryceland's home was not returned but a secretary who answered his old phone
number said he no longer worked for the bank.
Earlier this week Bank
of America said it planned to make restitution to shareholders of the
related mutual funds if its investigation found that those investors
suffered losses due to the use of illegal or improper trading.
Mr
Lewis this year has pushed for his New York-based asset management division
to triple its contribution to earnings over the next three to five years,
from about 5 to about 15 per cent.
The bank has about $315bn of assets
under management.
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