The SEC filed a civil fraud action today against FleetBoston Financial units Columbia Management Advisors and Columbia Funds Distributor for entering into market-timing arrangements that violated the terms of the prospectus of their Columbia funds. The SEC said it would, among other penalties, seek an order "enjoining Columbia Advisors from serving as an investment adviser to any registered investment company." The action was filed in federal court in Boston.
A lawyer with long experience at the SEC, who did not want to be identified, expressed surprise, saying this is the first time he had seen the commission threaten a move that would, effectively, bar a management company from managing mutual funds.
Asked if the SEC was looking to shut Columbia down, Celia Moore, deputy assistant district administrator for the SEC's Boston office, said, "This simply represents part of the relief that we are seeking in this complaint. And, generally speaking, past history has shown that the commission staff is more interested in ensuring that investment advisers conform to the securities law than in simply putting them out of business."
A spokesman at Columbia funds said he wouldn't interpret the order, and Columbia will put out an official response as soon as possible.