Richard Strong stepped down Tuesday as chairman, chief executive and chief investment officer of Strong Financial Corp. and from its board of directors effective immediately. Strong’s resignation followed disclosures that he had made questionable trades in his company’s mutual funds.
“For the past 29 years, this firm and what it represents have meant everything to me and I have always tried to act in the best interests of investors,” Strong said in a statement. “After weeks of intense reflection, I have come to realize that the best way for Strong Financial to pursue its promising future is for me to step down.”
The company has admitted that Strong engaged in some next-day transactions in his personal accounts, as well as those of friends and family. Those transactions are estimated to have yielded as much as $600,000.
Strong resigned last month as chairman of the board of Strong Mutual Funds, a unit of the parent company, but remained on its board of directors. Tuesday’s announcement means he is no longer a member of that board.
Investigators looking at the mutual fund industry are focusing on so-called market-timing transactions, in which short-term, in-and-out trades are used to capitalize on market-moving news. The process is not illegal, but many fund companies — including Strong — have policies against it because it increases costs and hurts long-term shareholders. Regulators have indicated it is fraudulent for a fund to allow selective market-timing without disclosing that to shareholders.
InsertArt(2083843)Kenneth J. Wessels, former president of the Dain Rauscher Wessels Capital Markets division and director of Dain Rauscher Corp., will take over as chairman and chief executive officer. Richard T. Weiss, Strong’s portfolio manager, will lead Strong’s investment department.
Strong, based in Menomonee Falls, Wis., manages about $42 billion in assets.