TRANSIT UNION (ATU)
Wall Street Pension Manager Indicted for Second Time
Alan B. Bond, a union pension manger who
is scheduled to stand trial in Nov. on charges he took illegal kickbacks
from brokerage firms, was arrested Aug. 9, on separate fraud charges, federal
prosecutors said. In a 32-page complaint filed in U.S. Dist. Court in Manhattan,
Bond was charged with conducting an illegal "cherry picking" scheme that
directed virtually all of his profitable stock trades to his own accounts
and most of his unprofitable ones to accounts he managed for three clients,
including the Birmingham Amalgamated Transit Auth. Local 725 pension fund.
Separately, Sec. & Exch. Comm'n attorneys were in court Aug. 9 seeking
to freeze all of Bond's assets.
From March 2000 to July 2001--a period when it has been very difficult to make money in the stock market--prosecutors contend Bond's account grew to $6.5 million from $263,360, a gain of more than 5,000%. The three clients reportedly lost a total of more than $56 million. During the period, Bond allegedly directed less than 17% of his unprofitable trades to his account while directing more than 83% percent of such trades to his clients' accounts. In addition to the Local 725, the other clients were Chapman Capital Mgmt., an investment adviser and the Old Dominion Disability & Retirement Allowance Plan, another pension fund.
Allegedly, Bond, who engaged in day trading, typically waited until late in the day or until after the close of the markets to instruct Neuberger Berman, his broker-dealer, on directing trades to various accounts. By delaying his instructions, Bond allegedly was able to determine whether trades were profitable or unprofitable.
In Dec. 1999, Bond, who was once a frequent guest on PBS's "Wall Street Week with Louis Rukeyser," was indicted on charges of taking more than $6 million in kickbacks of commissions paid to brokerage firms where he steered clients, including the pension fund of ATU Local 689 in Washington, D.C. His trial on the kickback charges is scheduled to begin in Nov. Theodore Wells, a attorney at Paul, Weiss, Rifkind, Wharton & Garrison, which is representing Mr. Bond, said yesterday that "these newly filed charges come as a complete surprise." Some of the money Bond made in the period in question went to pay his attorneys. In the complaint, Paul Higgins, a federal agent, said that Bond transferred $500,000 from his account to the Paul Weiss firm on July 2.
The complaint charges Bond with six counts of securities fraud and three counts of investment advisory fraud. If convicted, he faces a possible maximum sentence of 10 years on each of the securities fraud charges and 5 years on each of the advisory fraud charges. Bond is being held in jail pending a bail hearing scheduled for Aug. 14. [N.Y. Times 8/10/01]
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