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Alliance Nears Trade Settlement With Spitzer

Dec 14, 2003 | Wall Street Journal

Mutual-fund company Alliance Capital Management Holdings LP seeking to settle allegations of fund-trading improprieties, is nearing an agreement with the New York attorney general that would reduce fees for fund investors and a pact with federal regulators to pay a $250 million fine, the largest ever levied against a mutual-fund company.

The settlement, which could set precedents for agreements with other mutual- fund companies, would allow New York attorney general Eliot Spitzer and the Securities and Exchange Commission to both claim to have driven a hard bargain even as they have pursued different strategies.

A final agreement, which also would include structural reorganization in the way the funds are run, could be announced early this week, according to people familiar with the negotiations. A spokesman for Alliance declined to comment.

Assuming the deal is finalized, it would mark the first settlement of charges against a mutual-fund company for Mr. Spitzer's office since the investigation into improper fund-share trading began over the summer. His ability to gain a settlement agreement that involves fee concessions will likely have a ripple effect throughout the fund industry as he attempts to use the deal with Alliance as a template for future settlements with mutual-fund companies.

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