* Value Line, ex-execs agree to pay $45 mln in fines
* Value Line CEO resigns, replaced by chief legal officer
* Company accused of taking $24 mln in bogus commissions
(Adds settlement details, CEO resignation)
LOS ANGELES, Nov 4 Investment adviser Value
Line Inc (VALU.O), two former top executives and an affiliated
broker-dealer agreed on Wednesday to pay $45 million to settle
a U.S. Securities and Exchange Commission fraud case against
Value Line said that Chief Executive Jean Buttner had
resigned on Wednesday and was replaced by the company's Chief
Legal Officer Howard Brecher, who becomes acting chairman and
The SEC accused Value Line, Buttner, ex-Chief Compliance
Officer David Henigson and Value Line Securities Inc of
charging more than $24 million in bogus commissions on phantom
trades and brokerage services in nine Value Line mutual funds
from 1986 through November 2004.
Value Line, Buttner, Henigson, and VLS Inc did not admit
wrongdoing, but consented to the entry of a cease-and-desist
order that imposed $45 million in total fines.
The settlement also barred Buttner and Henigson from
associating with any broker, dealer, investment adviser and
investment company and from acting as an officer or director of
any public company, the SEC and Value Line said.
A Value Line spokesman had no additional comment on the
settlement. Neither Buttner nor Henigson could be immediatley
reached for comment.
In September, Value Line said it had established a $48
million reserve to fund its settlement offer to the SEC, ending
a four-year probe.
The company agreed to reimburse the affected mutual funds
and replace Buttner with Brecher upon entry of the settlement
At the time, Value Line said it had restructured its
investment management subsidiary and brokerage relationships
and was "confident" that they comply with regulatory
The investigation found that Value Line failed to pass on
discounted commission rates from outside brokers to the funds,
and through a "commission recapture program" added additional
fees for services that were not rendered, the SEC said.
The SEC said Buttner directed the "commission recapture
program" and Henigson was charged with implementing it through
unaffiliated broker-dealers. Both executives made false
statements to the company's board of directors and shareholders
and in securities filings, the SEC said.
(Reporting by Gina Keating, editing by Leslie Gevirtz)