Alliance Capital Management Holding L.P. ousted two top executives who had oversight of its mutual-fund unit and warned there is “high likelihood” that the company will face sanctions and penalties related to market-timing trades.
Alliance Capital, one of the nation’s leading asset-management firms, has been caught up by a growing inquiry into market-timing trades. Market timing, which is the rapid trading of fund shares designed to take advantage of short-term discrepancies between a fund’s share price and its underlying holdings, isn’t necessarily illegal. But regulators say that if mutual-fund companies with antitiming rules permitted such trades while profiting from those arrangements, that could be a violation of securities laws.
Alliance Capital said it is cooperating with investigators as it conducts an internal probe into the matter.
The asset-management firm said it asked for the resignations of John D. Carifa and Michael J. Laughlin.
Mr. Carifa was president, chief operating officer and director of Alliance Capital as well as chairman of the company’s mutual funds, and Mr. Laughlin was chairman of Alliance Capital’s mutual-fund distribution unit.
The company said its internal probe into market timing is ongoing and that it will take additional actions as warranted.
Lewis A. Sanders, Alliance Capital’s chief executive, said a committee of independent directors will, under an “explicitly expanded mandate,” oversee a review of the company’s compliance procedures and controls as well as its governance structure.
Alliance Capital said it remains committed to providing full restitution to investors hurt by the effect market timing had on its mutual funds.
The company also announced additional management changes. It named Executive Vice President of Finance and Operations Gerald M. Lieberman as its new chief operating officer and a director of Alliance Capital.
Marc O. Mayer, currently head of Alliance Capital’s institutional investment management sales and marketing unit, now will lead the company’s mutual-fund business.
And the company tapped David A. Steyn to replace Mr. Mayer. Mr. Steyn had run Alliance Capital’s United Kingdom, European and Middle Eastern institutional sales and client service group supporting all of the firm’s services.