Benefits March 11, 2004

AK Steel Forges Settlement With Ex-President

March 11, 2004 (PLANSPONSOR.com) - AK Steel Corp has reached a settlement with the company's former president who sought $11.1 million in benefits.
Reported by

Disclosed in the Middletown, Ohio-based company’s annual US Securities and Exchange Commission (SEC) filing, the company said an amount was paid to John Hritz that was less than he originally sought. The actual amount remains confidential, according to an Associated Press report.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

The original executive compensation brouhaha began after Hritz left his post in September. At the time, AK Steel handled Hritz’s departure like a resignation, resulting in a smaller benefits payout, while Hritz contends he stepped down after t he board of directors warned him he would be fired if he did not leave as part of a management restructuring. Thus, Hritz said, his exit was actually an “involuntary termination without case” and he should be eligible for his full severance and retirement benefits.

AK Steel originally paid a portion of the severance – $250,000 – but refused to pay more until the company evaluated its obligations in light of its overall financial challenges. Hritz filed a lawsuit in the US District Court in Cincinnati attempting to recoup his alleged losses. The lawsuit was dismissed March 2 after both sides said they had settled the dispute.

Administration March 10, 2004

Bank One Fund Unit Head Departs

October 15, 2003 (PLANSPONSOR.com) - Ripples of the Canary Capital Management scandal continue to move through the mutual fund industry with word that Bank One has replaced the head of its fund business.
Reported by

In an  internal memo posted on the firm’s web site, Chief Executive Jamie Dimon announced that Dave Kundert, chief executive of the bank’s investment management unit, will now run the One Group mutual fund family as fund unit president. Kundert said in his own memo quoted by Dow Jones that he had accepted Beeson’s resignation as fund group president, and also had named Norm Cook to replace John AbuNassar as head of the Bank One institutional asset management group.

The changes come as Bank One grapples with its alleged role in the improper trading of mutual-fund shares by hedge fund Canary Capital Partners. Last month, Canary agreed to a $40-million settlement with the New York state Attorney General’s Office in response to allegations that Canary conducted illegal late-trading of fund shares.

Get more!  Sign up for PLANSPONSOR newsletters.

Several mutual-fund firms, including One Group, were also named by the attorney general’s office for their participation in allowing Canary to conduct rapid short-term market-timing trades in their funds, a practice normally discouraged by fund companies (See  Spitzer Fund Abuse Probe Pumps Out More Subpoenas  ).

In addition to personnel changes, Dimon   CEO announced that the company is taking a number of measures to beef up its internal controls, including:

  • enhanced computer surveillance
  • additional compliance measures
  • strengthening of internal training and fund policies, procedures and sales practices to better identify “inappropriate timing strategies.”

Canary Details

The Dimon memo also revealed more details about Bank One’s involvement with Canary. Dimon told employees that One Group’s transactions with Canary were processed by Security Trust Co., a Phoenix, Arizona-based trustee/custodian   that processes fund trades, and was also mentioned in the attorney general’s complaint against Canary for its alleged role in facilitating Canary’s illegal late-trades (See  STC: Canary Trades Didn’t Harm Other Clients   ).

Over a period of 11 months, Canary had permission to trade “more frequently than other customers” in 11 One Group funds, the executive said. In its search for other arrangements similar to the one with Canary, Bank One has found “no systemic or broad problems,” and its probe continues, said Dimon.

Dimon said One Group’s contract with Security Trust was severed after the firm couldn’t give assurances that it had abided by all the provisions of its trade-processing contract. One Group’s contract with Security Trust “provided that the only trades that could be sent to One Group for same-day pricing were those Security Trust received prior to the market close,” Dimon asserted.

“We sought assurance from Security Trust that they had abided by the contract in processing orders for One Group. Security Trust has not given us that assurance and we have given them notice of termination,” Dimon said, according to Dow Jones. Security Trust recently announced that its CEO, Grant Seeger, had resigned.

Dimon said the bank’s own internal review has found no evidence of “Bank One or Bank One employees making the type of after-market trading arrangements that have been alleged of other institutions.”  

«