One-time powerhouse Strong Financial down to a staff of 1

The financial empire run by Richard Strong, a Midwestern money management powerhouse with more than 1,000 employees before a market-timing scandal erupted in 2003, is down to its last employee, who is turning off the lights at the Milwaukee-area enterprise.

Strong Financial Corp. sold its mutual fund, institutional and defined contribution businesses — accounting for $29 billion in assets — to Wells Fargo & Co. in May 2004, one week after Mr. Strong was banned for life from the financial industry by the Securities and Exchange Commission. He had resigned as chairman in late 2003.

But other Strong entities have lived on as shells of their former selves.

Now John Widmer, president of Strong Financial since 2005, is down to supervising himself. He said a controller and a secretary were let go earlier in the year as the process of paying more than $150 million to wronged investors came to a close.

The remaining entities — Strong Financial, Strong Capital Management, Strong Investments and Strong Investment Services — have not traded securities since 2004 and were delisted by regulators, said Mr. Widmer. He and his staff of six remained active selling the Strong office complex to Wells Fargo, hiring an independent consultant to determine the details of a reinstitution package to wronged investors and a third-party administrator to pay those claims; and other administrative tasks, such as subleasing office space originally occupied by Strong's technology group.

Mr. Widmer and his staff were not involved in the actual reimbursement decisions; they oversaw and acted as a resource to help the independent consultant understand the investor data, he said.

Mr. Widmer filed in May with the Wisconsin Department of Financial Institutions to dissolve the remaining entities.

But it's not easy getting out of the securities industry. It took more than six years for Strong Financial and the SEC to determine which investors would receive payment and how much money they would receive. It will take two years for the companies to be dissolved under state rules.

“It's been a longer process that I thought,” said Mr. Widmer. “I didn't think I would be here for so long.”

Mr. Widmer was Strong Financial's treasurer back when it was a going concern. A three-member board selected by Mr. Strong to take over Strong Financial named Mr. Widmer president in 2005.

Mr. Widmer would not identify the board members, but the company's annual report filed with Wisconsin regulators shows it consists of Richard Weiss, a former Strong portfolio manager who was named chief investment officer after Mr. Strong resigned; Kenneth Wessels, an investment banker who became CEO and chairman around the same time; and Frank Doyle, a former top executive at General Electric Co.

While Mr. Strong has received proceeds from the sales made by the Strong entities, he has no say in any of the companies' business, Mr. Widmer said.

Mr. Strong personally paid $60 million and Strong Capital Management paid $80 million under an agreement with the SEC in May 2004. That amount swelled to $156 million with interest by the time payouts began in the fall of 2010.

As for Mr. Strong, he is still in the money management business, running his family money through Baraboo Growth LLC, Brookfield, Wis. The SEC order barring him from the securities industry made an exception for his family money.

He also owns a 20% passive interest in Next Century Growth Advisors, a small money management firm in Minneapolis. Next Century had been a subadviser for one of Strong Financial's mutual funds from around 1999 until the Strong funds were sold to Wells Fargo.

A brighter light has shone on Mr. Strong in recent months, seemingly in the spirit of the elaborate quarterly parties he was famous for throwing for Strong employees and their families while he was in charge.

In May, Mr. Strong hosted 450 friends and family at an all-expenses-paid weekend at the Bellagio Hotel in Las Vegas to celebrate his 70th birthday. The event included entertainers such as KC and the Sunshine Band and motivational speakers like former Green Bay Packers defensive end Willie Davis.

A second event — at the Frontier Airlines Center in downtown Milwaukee also funded by Mr. Strong — was a reunion of about 2,000 former Strong associate employees.

David Braaten, an attendee and one of four co-CEOs at Strong Financial Corp. when it was a going concern, said the event was bittersweet.

Mr. Strong thanked everyone for making the Strong companies what they were, but broke down as he apologized for the events that triggered the end of their employment at his companies, according to Mr. Braaten.

Former employees say Strong was unlike any other company they had worked for. Employees were treated well: free lunches, a lecture series that featured speakers like Margaret Thatcher and primate expert Jane Goodall; even a trip to China for hundreds of employees back in the late 1990s.

But it wasn't all fun. “Strong was a hard place to work,” said Alan Krenke, who started at the firm in 1989 and was vice president of corporate service and real estate. He was also one of 15 minority owners in the firm until it was sold. Mr. Strong owned around 85%.

“Mr. Strong was singularly focused. He would set a goal and drive relentlessly; he would work 16 to 18 hours a day, seven days a week,” Mr. Krenke said.

And Mr. Strong expected that dedication from his associates.

Mr. Krenke has no regrets, saying Strong Financial was the best place he had ever worked: “It really fired you up to strive to be the best you could possibly be.”

Mr. Krenke is now president of his own securities industry compliance training and continuing education firm, and credits Mr. Strong with helping him develop the skills to succeed in his own business.

“People think Mr. Strong is a put-up-your-dukes, punch-you-in-the-face type of guy,” Mr. Braaten said. In reality, “he is a turtle,” Mr. Braaten continued. “He puts his head in the shell.”

Mr. Braaten said Mr. Strong wanted to fight the market-timing charges, but realized he couldn't beat the perception in the marketplace that he had done something wrong. Mr. Strong felt his best course of action was to save as many jobs as possible by selling to another company, Mr. Braaten said.

“He did an honorable thing and it broke his heart,” said Mr. Braaten.

Mr. Strong has not granted an interview since settling the charges that he engaged in market timing. An associate in his family office, who declined to give her name, said Mr. Strong was not interested in talking to a reporter.

The civil settlement he reached with regulators in 2003 did not fit the pattern that occurred when other money management firms settled market timing charges during that period. For the others, fines were paid but no wrongdoing was admitted.

In contrast, Mr. Strong admitted to wrongdoing and issued an apology, which said in part: “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.”