Yet another prominent mutual fund company is under seige by regulators. The SEC and the New York attorney general's office allege that senior executives at Columbia Funds Distributor Inc., a unit of Fleet Bank, approved secret agreements to let sophisticated investors trade rapidly in mutual funds at the expense of ordinary shareholders. The complaints allege that the company allowed flippers to engage in $2.5 billion of improper transactions in at least seven mutual funds from 1998 to the summer of 2003.

The civil fraud charge is unusual in the number of Columbia executives in various functions alleged to have permitted or facilitated market timing on what has been described as a "massive" scale.

"By putting their own financial interests ahead of their clients' interests, this investment adviser and broker/dealer violated their most basic duties and violated the trust that mutual fund shareholders placed in them," said Stephen M. Cutler, the SEC's director of the division of enforcement.

As of February 25, eight executives had reportedly been placed on leave. Most prominent are Joseph Palombo, COO, James Tambone and Louis Tasiopoulos, "co- presidents" of Columbia Funds Distributor. All three joined the company from Putnam Investments. When Tambone and Tasiopoulos left Putnam, former Putnam CEO Lawrence Lasser filed a lawsuit alleging that they had violated their employment agreements. Lasser was among the first industry CEOs forced to step down due to the market timing scandal.

The stakes are high at Columbia: the SEC seeks to enjoin the company from serving as an investment adviser to any registered investment company.

Already, one client is questioning its relationship with the Fleet unit. New York State officials, who awarded their 529 plan to Columbia in January, are considering their options. Columbia manages about $20.7 million in plan assets.

Unlike Putnam, whose public relations resources were quick to move into damage control mode once charges were filed, Fleet has said little. As of March 1, its corporate web site continued to post a letter from Palombo and Tambone, asserting that an internal investigation by Columbia has "not uncovered any instances where Columbia employees were knowingly involved in late trading of mutual fund shares." The letter also affirms that the company's "business is based on the integrity of our asset management practices." The letter is dated January 30.

Fleet is slated to merge with Bank of America, a firm which itself has not been scandal-free. Several B of A executives have been dismissed in response to SEC market timing charges. And days after the charges were filed against Columbia, one million banking customers won a class-action lawsuit in San Francisco against Bank of America and The Wall Street Journal reports that the victory may result in the bank having to pay $1 billion to reimburse them.