The Securities and Exchange Commission announced that on December 17, 2003, James P. Connelly Jr. was sentenced to 1 to 3 years in prison for tampering with evidence. Connelly, the former Vice Chairman of Fred Alger Management Inc., had pled guilty on October 16, 2003, to one count of Tampering with Physical Evidence, a Class E felony, in violation of New York State law. Also on October 16, 2003, the Commission issued an order finding that Connelly had violated the federal securities laws by permitting select investors to "time" Alger mutual funds in exchange for maintaining at least 20% of their Alger investment in buy-and-hold positions, sometimes referred to as "sticky assets." The Commission directed Connelly to cease and desist from future violations of various provisions of the federal securities laws; barred him from association with any broker, dealer or investment adviser; barred him from serving in various capacities with respect to any registered investment company; and imposed a $400,000 civil penalty. Connelly consented to the Commission order without admitting or denying the findings.
The criminal charges against Connelly stemmed from his repeated efforts to tamper with an ongoing investigation by the New York Attorney General and the Commission of illegal trading practices in the mutual funds industry, including by directing subordinates to delete emails called for by subpoenas. Connelly had admitted his conduct under oath before the Hon. James Yates of the Supreme Court of New York State in Manhattan. New York's statute outlawing tampering with evidence calls for a maximum sentence of 4 years in state prison.
For additional information, see Securities Act Release No. 33-8304 (Oct. 16, 2003) and Administrative Proceeding File No. 3-11303 (Oct. 16, 2003).
http://www.sec.gov/news/press/2003-138.htm
http://www.sec.gov/litigation/admin/33-8304.htm