Securities regulators are considering taking legal action against
over allegations stemming from two separate investigations.
One of the probes concerns allegations of trading infractions by some Wachovia employees in shares of
, a bank that merged with Wachovia in 2001. The other matter involves allegations of market-timing in some mutual funds sold by its
Evergreen Investment Management
The Charlotte, N.C.-based bank disclosed its regulatory interest in a corporate filing Tuesday. Wachovia says it learned of the
Securities and Exchange Commission's
intentions during the last two weeks of July.
In midmorning trading, the stock was down 57 cents, or 1.3%, to $43.97.
The bank says regulators are troubled by two potentially abusive trading arrangements at Evergreen, involving allegations of market-timing, or frequent trading of mutual fund shares. One of those arrangements involves a deal between a former Evergreen employee and a stockbroker that permitted the broker to place market-timing trades on behalf of a client. The other arrangement concerns trading activity by a former Evergreen portfolio manager in a mutual fund he managed.
Wachovia, in the filing, says it will try to persuade the SEC not to file formal charges. The filing didn't identify the former Evergreen employees or the stockbroker.
In the trading investigation, Wachovia says the SEC is considering filing charges against the bank and several employees, stemming from purchases they made of First Union stock following the April 2001 merger announcement. Wachovia says some of the employees still work for the bank.
The merger between First Union and Wachovia was a contentious one that was countered by an unsuccessful hostile bid by
. Ultimately, First Union prevailed in its bid for Wachovia, but not after First Union and SunTrust waged an aggressive campaign for the votes of Wachovia shareholders. After the merger, First Union adopted the Wachovia name.
Wachovia, in the filing, says it "believes all such stock purchases and disclosures complied with applicable law.''