US regulators are considering action against Wachovia for possible improper trading in mutual funds. Wachovia also says the Securities and Exchange Commission is considering enforcement action for stock purchases made ahead of its merger with First Union Corp. Wachovia, the fourth largest U.S. bank, is now the subject of five regulatory probes, four of them being conducted by the SEC.
In one investigation, the SEC is considering an action against its mutual fund unit, Evergreen Investment Management Co., because of alleged improper trading in Evergreen funds. Wachovia said in a filing with the SEC that Evergreen was informed last Wednesday that the SEC is considering an enforcement action against the investment advisory unit and other Evergreen entities. The proposed action revolves around four issues, including a trading arrangement involving a former Evergreen employee and trading by a former Evergreen portfolio manager in the mutual fund he managed, Wachovia said in an SEC filing.
The two other issues relate to the adequacy of Evergreen’s e-mail retention practices and the monitoring of trades and the enforcement of exchange limits set forth in Evergreen’s prospectuses, the bank holding company said.
Wachovia says it does not believe enforcement actions should be carried out – which it plans to explain to the SEC in a written document. The bank said, based on current information and the advice of counsel, available insurance coverage and established reserves, that it does not believe the outcome of actions against Wachovia and its units will have a materially adverse impact. Boston-based Evergreen has $246 billion in assets under management.
In the second probe, Wachovia said the SEC is investigating certain purchases of First Union shares before the 2001 merger, and the disclosure of the purchases made by both banks. First Union acquired Wachovia in September 2001 for $14.1 billion in stock, but kept the Wachovia name.