Strong/Corneliuson to Repay Three of Its Funds to Settle SEC Charges

The Strong/Corneliuson mutual fund group agreed Tuesday to repay $444,299 to three of its funds to settle charges by the Securities and Exchange Commission that it failed to comply with federal laws in more than 600 transactions between 1987 and 1989.

The SEC action named not only Strong/Corneliuson Capital Management, which has more than $10 billion in assets, but also its chairman, Richard Strong, and chief financial officer, Bruce Behling.

At issue are SEC rules governing the transfer of assets between affiliated mutual funds, transactions known as cross trades.

The SEC alleged that many of Strong/Corneliuson’s cross trades--mainly involving junk bonds--failed to comply with the rules because the bonds were improperly priced by the firm.

Without admitting or denying guilt, the Menominee Falls, Wis.-based firm agreed to repay $327,506 to the Strong/Corneliuson Total Return Fund, $70,563 to its Discovery Fund and $46,230 to its Advantage Fund. The figures represent the net effect of pricing errors in the trades, the SEC said.

Strong and Behling were censured but not fined.

The SEC also alleged that Richard Strong purchased and sold securities for his own account that had been recommended to clients--a conflict of interest.