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General American Life Insurance Co.

St. Louis, MO: (Aug-09-07) The Securities and Exchange Commission brought a lawsuit against General American Life Insurance Co. and a former senior vice president, William Thater, alleging that they played a role in a late trading scheme. The suit claimed that Thater permitted, and General American failed to prevent, late trading of mutual funds underlying one of General American's variable insurance products. The Commission's Order finds that from Feb. 1, 2002, to Nov. 18, 2002, the family submitted, confirmed, or canceled 79 mutual fund trade requests after 4 p.m. Eastern time. As a result of the late trading, the value of the underlying mutual funds was diluted by about $3.3 million. Certain General American personnel became aware of the written agreement and the late trading activity, but failed to take adequate steps to investigate the activity and ensure that it ceased.

In a settlement reached, the two defendants were ordered to pay civil penalties totaling $3.4 million for their roles in the late trading scheme. General American will pay a civil penalty of $3.3 million and Thater, 52, of Danbury, Conn., will pay disgorgement, prejudgment interest and civil penalties totaling $163,137. [ST. LOUIS BUSINESS JOURNAL: LATE TRADING]


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Published on Aug-10-07


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