Ukiah Daily Journal from Ukiah, California on March 16, 2004 · Page 14
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Ukiah Daily Journal from Ukiah, California · Page 14

Ukiah, California
Issue Date:
Tuesday, March 16, 2004
Page 14
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A-14-TUESDAY, MARCH 16, 2004 NATION THE UKIAH DAILY JOURNAL B of A Bush administration suggests Kerry lied about foreign leaders' support to pay millions With FleetBoston to pay $515 million and cut fees By MARCY GORDON AP Business WASHINGTON — Bank of America and FleetBoston Financial have agreed to pay $515 million to resolve allegations of improper mutual fund trading and to reduce fees investors pay by $160 million in the biggest fund scandal settlement to date, authorities said Monday. Eight members of the board of directors of Nations Funds, Bank of America's group of mutual funds, also Will be required to resign their positions within a year for their alleged role in allowing the trading violations — the first sanction of its kind in what has become an industry- wide investigation. "These directors clearly failed to protect the interest of investors," said New York Attorney General Eliot Spitzer, who brought the first charges last September in the controversy that has rapidly enveloped the $7 trillion fund industry. "They acknowledged the problem of market timing, but then allowed a favored client to engage in that harmful practice. The departure of these board members should sound an alarm for all those who serve |n similar capacities." Under the tentative agreement, which must be formally approved by the Securities ' and Exchange Commission, Bank of America will pay $125 million in civil fines and $250 million in restitution to investors. FleetBoston will pay $70 million in civil fines and an additional $70 million in restitution. In addition, the two financial titans — which plan to merge — agreed to make certain changes in their mutual fund operations, including the board overhaul. By year's end, Bank of America will have to be completely out of the securities clearing business, that of executing transactions for other parties. "The $375 million that Bank of America has agreed to pay and the significant reforms that it has agreed to implement reflect the seriousness of the misconduct in this matter," said SEC Enforcement Director Stephen Cutler. "We will continue to investigate that misconduct in an effort to hold all responsible parties accountable." ' The $ 160 million reduction in fees, or $80 million for each company over a five- year period, was separately negotiated by Spitzer. As their investigations of the fund industry have widened, the SEC has rejected Spitzer's view that excessive fees charged by fund companies should be cut as part of legal settlements. Bank of America's fund trading came under scrutiny last September, when Canary Capital Management LLC agreed to pay $40 million to settle charges it engaged in improper short-term trading and illegal aftermarket trading with several mutual fund families, including Bank of America — though the bank was not charged at the time. . Last month, the SEC and Spitzer alleged in a civil lawsuit that FleetBoston's two mutual fund subsidiaries engaged in massive trading abuses over a five-year period that harmed ordinary investors. In the suit filed in federal court in Boston, where Fleet is based, the SEC and Spitzer alleged that Fleet's Columbia Management Advisow Inc. and Columbia funds Distributor Inc. allowed the short-term trading — also known as market timing — by favored big- money investors at the expense of more traditional, long-term investors. By MIKE QLOVER Associated Press WASHINGTON — The Bush administration, casting doubts on John Kerry's credibility, strongly suggested on Monday that the presumptive Democratic nominee lied when he said some foreign leaders privately backed his presidential bid. One day after Secretary of State Colin Powell called on Kerry to identify his foreign backers but made no accusations, the administration ratcheted up the challenge, saying Kerry should identify the leaders who purportedly hope he defeats President Bush in November. "Either he is straightforward and states who they are, or the only conclusion one can draw is that he is making it up to attack the president," said White House spokesman Scott McClellan. Vice President Dick Cheney said Americans deserve to know what Kerry has been telling foreign leaders. Cheney noted that at a campaign event Sunday in which a heckler challenged Kerry to produce names, the Democrat declined, saying, "that's none of your business." "But it is our business when a candidate for president claims the political endorsement of foreign leaders," Cheney said at a congressional fund-raiser in Phoenix. "At the very least, we have a right to know what he is saying to them that makes them so supportive of his candidacy." "When it comes to protecting America from terrorism, this administration is big on bluster and short on action," - Sen. John Kerry Said Sen. Norm Coleman, R-Minn., in a conference call arranged by the Bush-Cheney campaign: "He clearly has an obligation to, you know, you put up or you shut up. You , don't make up reckless charges and then say, well, it's really secret, I can't tell you." Kerry said at a fund-raiser last week in Florida that he's heard from some world leaders who quietly back his candidacy and who hope he defeats Bush in November. He has declined to identify the leaders, arguing that to do so would betray confidences. Three times on Monday, McClellan repeated the charge that Kerry was "making it up." He also took issue with Kerry's suggestions that the administration held up for "Either he is straightforward and states who they are, or the only conclusion one can draw is that he is making it up..." - White House spokesman Scott McClellan political purposes announcement of an agreement with Libya to rid itself of weapons of mass destruction; and that the administration had rebuffed offers from Russia and France to avert the Iraq war. "This is not the first time he has refused to back up his assertions," McClellan said. In response, the Kerry campaign issued a list of statements made by Bush administration officials that proved false, including the claim about Iraq's weapons of mass destruction and the prediction that tax cuts would create jobs. The campaign also questioned why the White House press secretary would be doing the work of the re-election campaign. "The White House would be better off spending its time repairing our alliances around the world so we can collectively fight the war on terrorism and better protect the United States, rather than using the White House press room as a place to carry out political attacks," the campaign said. Kerry also dismissed McClellan's challenge, arguing that the administration was trying to change the subject from jobs, health care and other issues. "They don't have a campaign so they're trying to divert it," he told reporters. The issue of support from foreign leaders comes as the administration deals with the surprising election results in Spain in which voters on Sunday ousted the conservative party that had strongly backed Bush on the Iraq war. Earlier in the day, Kerry assailed Bush's leadership on protecting the nation. He also met with Democrat Al Sharpton, who endorsed the senator but did not abandon his own long-shot bid, and Gerald McEntee, president of the American Federation of State, County and Municipal Employees. Speaking to a meeting of the 263,000-member International Association of Firefighters, which . has endorsed Kerry, the Democrat faulted Bush for using the threat of terrorism as "a political prop" to advance his reelection campaign Without ensuring a safer nation. "America doesn't need leaders who play politics with 9-11 or see the war on terror as just another campaign issue," Kerry said. "Our nation's safety is too important.". The senator complained that Bush resisted creation of the Department of Homeland Security and has failed to provide firefighters and other first responders with enough financial resources. "When it comes to protecting America from terrorism, this administration is big on bluster and short on action," said Kerry. "As we saw again last week in Spain — real action is what is needed." Within hours of Kerry's speech, Homeland Security Department Secretary Tom Ridge said a task force comprised of governors and municipal officials would take two months to study how best to get federal funds into local hands. Republican Sen. Arlen Specter of Pennsylvania, traveling on Air Force One with President Bush Monday, criticized his Senate colleague, saying Kerry stands on both sides of every issue and questioning the four-term lawmaker's productivity. "I don't know of any major legislation that he's introduced," Specter said. "That's not easy to do in 19 years." Associated Press Writers Scott Lindlaw and Frederic J. Frommer in Washington and Deb Riechmann in Ardmore, Pa., contributed to this report. just for being a Hot Seat Winner, you can pick your LUCKY 4 Leaf Clover 707-485-0/00 www.coyot North Sum: Si ins! l. \ L

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