“A senior executive at Fred Alger Management pleaded guilty yesterday to charges of tampering with evidence and agreed to pay a $400,000 fine for allowing investors to improperly trade in and out of the company’s mutual funds,” writes Riva Atlas in today’s New York Times.

“The criminal charges, brought by the New York attorney general, and the settlement with the Securities and Exchange Commission are the first involving a mutual fund executive since regulators began their broad investigation of the fund industry more than a month ago.”

“The Alger executive, James Patrick Connelly Jr., was director of sales and marketing at the firm, which manages $10 billion in assets. He is the third person to face criminal charges in the investigation; the others are a Bank of America executive, who has vowed to fight them, and a trader at the Millennium Partners hedge fund, who has pleaded guilty.”

“Executives said that Mr. Connelly’s guilty plea was particularly shocking within the fund industry given his leading role in Alger’s recovery after the terrorist attacks on the World Trade Center, where Alger had offices. Alger lost 20 of its 24 fund managers and analysts in the attack.”

” ‘I am bowled over,’ said Geoffrey Bobroff, an industry consultant. ‘He was the guy who was traipsing around the country visiting with clients and potential clients.’ “

“Alger fired Mr. Connelly, 40, of Chatham, N.J., after it uncovered evidence late last week that he tried to destroy incriminating e-mail messages soon after the regulators’ fund inquiry became public, according to a statement the firm released yesterday.”

“Mr. Connelly did not return calls placed to his home. His lawyer, Alan Vinegrad, declined to comment.”

“According to documents filed Thursday by the S.E.C., Mr. Connelly arranged for “select investors” to engage in market timing through frequent, fast trades in and out of Alger mutual funds from the mid-1990’s until earlier this year. Mr. Connelly authorized the trading even though the funds’ prospectuses said investors could trade in or out only six times a year.”

“In return for allowing these short-term trades, Mr. Connelly asked investors to commit a certain amount of money to the firm for the long term, the S.E.C. said. The short-term trading reached its peak earlier this year, with a dozen investors trading approximately $200 million in Alger funds, the commission said.”