Updated from 12:32 a.m. EDT

Billionaire Richard Strong, the founder of

Strong Capital Management

, will escape criminal prosecution in the mutual fund trading scandal but will pay a $60 million fine and be barred from working in the securities industry for the rest of his life, according to a settlement announced Thursday.

In addition, the mutual fund company that bears his name will pay an $80 million fine and reduce it fund fees by $35 million over the next five years.

New York Attorney General Eliot Spitzer announced the deal with Strong and the Wisconsin-based mutual fund company early Thursday morning. This follows months of negotiations that also involved the

Securities and Exchange Commission

and the Wisconsin attorney general's office.

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 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.

Market-timing of mutual fund shares is technically a legal trading strategy. But it is prohibited under most mutual fund prospectuses because it can dilute the value of a portfolio's holdings. Market-timing and late trading are the two main trading abuses regulators have focused on in their sweeping investigation of the $7.6 trillion mutual fund industry. Late trading is an illegal practice in which mutual fund shares are bought after 4 p.m. at stale prices that don't reflect after-hours news.

Strong stepped down from the company last fall, shortly after the scandal broke. His attorney Stanley Arkin could not be reached for comment.

But as part of the deal with regulators, Strong also offered a two-paragraph apology for his actions. In the statement, released by Spitzer's office, he says, "My personal behavior in this regard was wrong and at odds with the obligations I owed my shareholders, and for this I am deeply sorry."

Later in the day, the company itself issued a statement. "These settlement agreements allow us to move forward and concentrate all of our energies on meeting the needs of our clients and delivering high-quality investment performance," said Kenneth J. Wessels, Strong Capital chairman and chief executive.

With a settlement completed, it's expected that Strong Capital will now be able to go forward with its plans to sell the fund company. San Francisco-based

Wells Fargo

(WFC) - Get Report

is considered the mostly likely buyer of the firm, which has $35 billion in assets.

The eventual buyer of Strong Capital will get the firm at a steep discount to what it might have sold for last summer. The scandal clearly has tarnished Strong Capital's reputation, prompting investors to pull money from its funds. In October, shortly after the mutual fund scandal was breaking, Strong Capital had $43 billion in assets.

Despite stepping down from the firm, Strong still has an 85% ownership stake in Strong Capital.

Last fall, Spitzer's office made it widely known that the attorney general found the abusive trading by Strong for his own personal gain particularly galling and was considering filing criminal charges against the near-billionaire. A New York state grand jury began hearing testimony from witnesses against Strong back in November.

But prosecutors in Spitzer's office, sources say, decided not to pursue criminal charges against the 61-year-old executive because they found no evidence of late trading. Spitzer's office has been reluctant to file criminal charges against individuals in cases involving only allegations of market-timing. The SEC does not have jurisdiction to pursue criminal prosecutions.

"This agreement is part of our ongoing effort to clean up the mutual fund industry and demand accountability from those who have been entrusted by the investing public," Spitzer said in a prepared statement.

In a civil complaint filed as part of the settlement, Spitzer's office charge that Strong personally made 1,400 frequent trades in his company's funds. The SEC, in its settlement agreement with Strong, charges the Wall Street executive netted profits of $1.6 million from his trading.

The deal with Strong, though it includes a stiff penalty, is likely to fuel a growing criticism that Spitzer's office has been unwilling to file criminal charges against any Wall Street heavyweights. To date, the eight people charged or convicted by Spitzer's office have been relatively little-known executives and brokers. All eight are accused of being involved in either late trading or obstructing justice.

Indeed, a defense lawyer for one person awaiting trial on criminal charges filed by Spitzer's office blasted the New York official with displaying a double standard in the investigation.

"This is selective prosecution of the worst kind," says Gerald Shargel, who represents Bill Kenyon, former president of

Security Trust

, an Arizona-based trust bank that allegedly permitted Canary and other hedge funds to engage in late trading of mutual funds. "They are trying to shoot small fish in a barrel, while the major players walk away. This is just fundamentally unfair."

Kenyon, along with Security Trusty's founder, Grant Seeger, have been charged with grand larceny by Spitzer's office. Bank regulators, meanwhile, have shut down Security Trust because of its role in the trading scandal.

Juanita Scarlett, a Spitzer spokeswoman, says it's wrong to draw a comparison between the investigation of Strong and that of the former executives of Security Trust. The executives at Security Trust were involved in late trading, while there's no evidence that Strong engaged in that kind of trading activity.

"We've said all along that market-timing, while generally prohibited, is usually not prosecuted criminally, and this is a case of market-timing," says Scarlett, explaining Spitzer's decision not to pursue criminal charges in the Strong matter. "In this case there were no clear violations that rose to the criminal level."

Other prosecutors, however, have shown a willingness to file criminal charges in cases involving only allegations of market-timing. In March, federal prosecutors in New York filed criminal charges against three former brokerage executives at Mutuals.com, a Dallas-based brokerage in a market-timing case. Federal prosecutors charge the former Mutuals.com executives used a series of deceptive practices to conceal the market-timing trades of the firm's hedge fund customers.

To date, more than a dozen mutual fund firms have paid a little over $2 billion in fines and restitution in the trading scandal.

Spitzer began the mutual fund investigation by announcing a $40 million civil settlement with Canary Capital and its founder Edward Stern last September. At the time, the deal was widely praised because it opened a door into an area of improper behavior to which the SEC had paid scant attention.

But in recent weeks, some lawyers and people on Wall Street have grumbled that Spitzer may have been too quick to cut a deal with Canary, especially since the hedge fund has had a role in just about every mutual fund enforcement action to date.