updated 5/20/2004 2:17:31 PM ET 2004-05-20T18:17:31

Strong Financial Corp. founder and CEO Richard Strong agreed to pay a $60 million fine to settle allegations he made $1.8 million in profits through improper trading in mutual funds, regulators said.

Strong Financial will pay $80 million in disgorgement of revenues, civil penalties and fee reductions, in settlements with attorneys general in New York and Wisconsin and the Securities and Exchange Commission signed Thursday.

New York Attorney General Eliot Spitzer said Strong, who resigned in December as chairman, CEO and chief investment officer, would also issue a personal apology and accept a lifetime ban from the financial industry.

“Throughout my career, I have considered it to be my sacred duty to protect my investors; and yet in a particular and persistent way I let them down,” Strong said in a written apology. “In previous years, I frequently traded the shares of the Strong funds, at the same time that the advice which we gave our investors was to do the opposite and to hold their shares for the long term.

“My personal behavior in this regard was wrong and at odds with the obligations I owed my shareholders, and for this I am deeply sorry.”

Strong owns 85 percent of the company, which has been under investigation by federal and state regulators in New York since last fall, when Spitzer went public with allegations of widespread trading improprieties that hurt ordinary investors.

Strong is the highest level executive to settle a trading case, Spitzer said.

“You can’t get any higher than the fellow who is CEO and chairman of the board and that’s why his behavior has always struck as that much more egregious,” Spitzer said. That’s why regulators insisted on $60 million penalty for $1.8 million in personal benefit, he said.

The deal with Strong Financial includes structural reforms for fees, sets new standards for board independence and accountability at the mutual fund company and preserves jobs. Fees to Strong shareholders will be reduced by 6 percent for five years, a reduction valued at $35 million.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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