SEC drops Bank of Hawaii mutual-fund investigation

Bank of Hawaii Corp. said yesterday the Securities and Exchange Commission won't recommend enforcement against the company on charges of alleged improper mutual-fund trading.

Bank of Hawaii said the regulator has ended the investigation, which was first announced by the company on Sept. 30. The SEC won't recommend action against the Asset Management Group of Bank of Hawaii, a subsidiary, or any current or former officers.

Bank of Hawaii had third-quarter costs of $3.8 million related to the matter, spokesman Stafford Kiguchi said. The SEC had issued a "Wells notice" that indicated it may recommend civil enforcement. The notice stemmed from an investigation into trades made at Pacific Capital Funds, a mutual fund run by Asset Management Group.

The investigation centered on alleged excessive and late market trades in 2002 and 2003 by an unnamed former employee who may have increased the value of his retirement account by about $110,000. The employee was later fired and the bank said it agreed to reimburse the fund for losses and legal costs.