FleetBoston Suspends 8 After Civil Charges

FleetBoston Financial Corp. has placed on leave eight portfolio managers and executives at its Columbia Funds subsidiary in the wake of civil charges this week alleging the firm tolerated improper trading by big clients at the expense of ordinary shareholders.

Spokesman Charles Salmans confirmed the company suspended eight employees but declined to name them or say how many were executives and how many were portfolio managers.

The Boston Globe and Wall Street Journal, citing an official involved in the case and a person familiar with the matter, respectively, said the suspended employees included James Tambone and Louis Tasiopoulos, co-presidents of Columbia Funds Distributor Inc., the sales and marketing arm of Fleet’s Columbia funds.

The Globe also identified one suspended employee as Christopher Legallet, co-manager of the Newport Tiger mutual fund.

John Pappalardo, an attorney for Tambone, confirmed his client had been placed on leave.

“As co-president of Columbia Funds Distributor, Mr. Tambone consistently opposed disruptive market timing,” Pappalardo said Thursday.

On Tuesday, federal and state regulators accused FleetBoston’s mutual fund operations of committing fraud by allowing select investors to market time a total of $2.5 billion from 1998 to 2003.

Market timing is a type of in-and-out trading that is not illegal but widely prohibited by many funds. Officials called the FleetBoston trading some of the most egregious behavior yet uncovered in the mutual fund trading scandals.

The civil complaint did not identify Columbia employees by name but did refer to several by position, including “a president.”

Columbia Management Group Chief Executive Keith Banks has said damage to shareholders amounted to about $25 million. He said Fleet planned to make restitution in that amount.

FleetBoston is being acquired by Bank of America Corp.