Updated from 3:19 p.m. EST

Security Trust has become the first financial services firm embroiled in the mutual fund trading scandal to get the death penalty.

In separate actions filed Tuesday, federal and state authorities movedto shut down the Phoenix-based trust bank, filed criminal charges againstthree of its former top executives, and lodged civil fraud charges againstthe firm that serves as a custodian for more than 2,500 retirement planswith $13 billion in assets.

Bank regulators at the Office of the Comptroller of the Currency saidthe 12-year-old firm will wind down its operations by March 31, to give time for its customers to move their retirement plans to other financial services firms.

Meanwhile, New York Attorney General Eliot Spitzer filed grand larcenycharges against Grant Seeger, the company's former chief executive;William Kenyon, the firm's former president; and Nicole McDermott, a formersenior vice president.

The

Securities and Exchange Commission

also filed civil fraud charges against the former executives, as well as the company.

"Pervasive misconduct must be met with appropriate sanctions," saidSpitzer, in a prepared statement.

The joint actions against Security Trust have been in the works eversince Spitzer identified the trust bank as a pivotal player in thefast-expanding mutual fund trading scandal.

TheStreet.com

first reported that Spitzer's office was

leaning toward filing criminal charges in its investigation of Security Trust.

Security Trust played a key role in enabling the

Canary CapitalPartners

hedge fund to make illegal late trades in shares of nearly 400different mutual funds over three years. Authorities contend the illegal trades, the vast majority of which happened more than two hours afterthe close of the trading day, generated a profit of $85 million for Canary.

In exchange for permitting Canary to make late trades, Security Trustallegedly received a cut of Canary's illicit profits, equaling about $5.8 million.

In other scandal news,

UBS

(UBS) - Get Report

said it fired two brokers and disciplined nine others, after conducting an internal review into improper trading in mutual fund shares. The Swiss-based financial firm said it turned over the findings from its internal review to regulators.

The mutual fund scandal has led to firings and resignations at otherWall Street firms including

Bank of America

(BAC) - Get Report

,

Bank One

(ONE) - Get Report

,

Bear Stearns

(BSC)

,

Citigroup

(C) - Get Report

,

Merrill Lynch

(MER)

and

Prudential Securities

. The scandal also has led to a filing of civil charges against mutual fund companies ranging from

Marsh & McLennan's

(MCC) - Get Report

Putnam Investments to

Pilgrim Baxter & Associates.

Security Trust issued a statement saying "it will continue to cooperate with all authorities to achieve an orderly dissolution of the company.'' The lawyers for the three former company executives were unavailable for comment. The defendants each pleaded not guilty to the charges.

Regulators consider late trading a serious offense because it permits favored customers to buy -- or cancel an order to buy -- shares of mutual funds after the close of the trading day. The late trades enable customers to take advantage of late-breaking, market-moving news, an opportunity denied most other investors.

Bank regulators disclosed Tuesday that they began to tighten the screwon Security Trust a few weeks ago. On Oct. 29, the OCC issued a cease-and-desist order, directing the company to stop a "number of illegal andabusive practices," and ordered its controlling shareholder,

CapitalManagement Investors Holdings

of Chicago, to make an immediate capital infusion into the bank.

The felony complaints filed by Spitzer's office against the three former Security Trust executives reveal that prosecutors relied on information provided by Edward Stern, the manager of Canary, and Jay Marran, a former Security Trust employee, to build their case. Stern, in settling with Spitzer's office, agreed to cooperate with the ongoing investigation and could testify at any future trials.

Spitzer's office and the SEC found that Security Trust disguised many of the late trades placed by Canary as trades made by one of the trust bank's retirement plan customers. Through this deception, Stern told investigators that his hedge fund made millions of dollars in the following six mutual funds:

MFS Emerging Growth Fund

,

Legg Mason Value Trust Fund

,

Artisan International Fund

,

AXP International Fund Y Fund

,

SEI International Equity A Fund

and

SEI International Emerging Markets I Fund

.

The SEC also found evidence that another hedge fund, Samaritan Asset Management, may have engaged in a different kind of inappropriate trading with Security Trust. The SEC, in its complaint filed in an Arizona federal court, contends that Security Trust allowed Samaritan to engage in market timing of mutual fund shares, a less onerous offense but one that many mutual funds discourage.

The SEC alleges that Security Trust tried to hide the market timing trades it carried out for Samaritan by "piggybacking'' onto trades that it was supposed to make for its retirement plan clients.

Samaritan, a $200 million hedge fund based in Illinois, is not named as a defendant in any of the regulatory actions. But early on in the mutual fund investigation, Spitzer's office served a subpoena on the hedge fund. Samaritan could not be reached for comment.