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For Richard Strong, Pauperism Does Not Beckon

The disgraced fund founder sells his shop to Wells Fargo.

Richard Strong should have no problem paying his $60 million fine now that

Wells Fargo

(WFC) - Get Wells Fargo & Company Report

is buying his

Strong Capital Management

mutual fund firm.

San Francisco-based Wells and Strong formally announced the long-rumored deal before the start of trading Wednesday. The companies didn't immediately disclose the purchase price, but most on Wall Street had predicted the fund family would fetch about $500 million.

With Richard Strong estimated to own an 85% stake in the Wisconsin-based company, the near-billionaire won't be forced to dip into his pockets to pay the penalty regulators imposed on him to settle allegations of abusive mutual fund trading.

Strong stepped down as chief executive of Strong Capital shortly after he was implicated in the mutual fund trading scandal last September. New York Attorney General Eliot Spitzer initially considered filing criminal charges against Strong, but ultimately decided that the Wall Street executive's abusive trading, while unsavory, was not illegal.

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In addition to Richard Strong's fine, the mutual fund company that bears his name was ordered by regulators to pay $80 million in fines and restitution, and to reduce its fund fees by $35 million over the next five years. Strong also issued an apology to Strong Capital shareholders and agreed to a lifetime ban from the securities business.

Strong Capital was one of the first mutual fund companies to be implicated last September by Spitzer's office in the far-reaching mutual fund trading investigation. Spitzer charged that the mutual fund company struck a deal to permit the now infamous

Canary Capital Partners

hedge fund to improperly market-time some of its mutual funds.

But Spitzer's office found that the abusive trading at Strong went all the way to the executive suite and that Strong himself was personally engaged in market-timing -- making frequent trades in shares of his company's funds.

The trading scandal delivered a big blow to Strong's reputation and forced the company to sell at a steep discount. Before the trading scandal, Wall Street sources said the fund company likely could have sold for at least $1 billion.

In acquiring Strong, Wells obtains a fund company with $34 billion in assets. However, that's down from $43 billion before the scandal.

"This is a great strategic fit of investment talent, resources, well-established investment management products and new distributions channels," said Mike Niedermeyer, head of Wells' investment management business, in a prepared statement.

The deal is expected to close by the first quarter of next year.