Strong described as driven, detail oriented, volatile

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Milwaukee – Richard Strong’s life is Strong Financial Corp.

At 61, he spends 14 to 16 hours a day — sometimes seven days a week — at   the mutual fund company he founded and heads. He sleeps very little, instead   using work to recharge, said Steve Hannah, his friend and national media consultant   for the firm.

When the company’s suburban Milwaukee headquarters was under construction,   Strong often would visit the site with a level and a T-square “to be sure   it was done right,” Hannah said.

Friends say that attention to detail is indicative of the man who built Strong   Financial from nothing nearly 30 years ago. The company now has 1,300 employees   and manages $42.7 billion in assets. Strong himself is worth $800 million, according   to Forbes magazine.

Now Strong’s beloved firm is in jeopardy as the Securities and Exchange Commission,   New York state attorney general Eliot Spitzer and the Wisconsin Department of   Financial Institutions investigate him and the company for alleged improper   trading — not the first time the firm has been scrutinized. The trades allegedly   benefited Strong, his family and friends and are estimated to have yielded as   much as $600,000.

Strong resigned as chairman of Strong Mutual Funds’ board of directors in the   wake of the investigation. Richard Strong owns 85 percent of the company, is   still its CEO and still serves on the board, which represents investors’ interests.

Criminal charges pending?

A source told The Associated Press criminal charges likely will be filed this   week against Strong and his company.

The charges could come from so-called market-timing transactions, in which   short-term, in-and-out trades are used to capitalize on market-moving news.   The process isn’t illegal, but Strong and many fund companies have policies   against it because it increases costs and hurts long-term shareholders.

The industry was shocked that Strong could possibly be involved in market timing,   said Scott Berry, a mutual fund analyst at Chicago-based Morningstar Inc.

“It opened it up to ‘If Dick Strong is doing it, we should look at every   mutual fund company out there to see if it’s going on elsewhere,'” he said.

But Strong and the firm were investigated before. In 1994, the SEC sanctioned   Strong, his firm and another unnamed individual for making improper trades among   its funds in the late 1980s. Ultimately, $440,000 was reimbursed to the funds   involved. Two years later, the company agreed to reimburse 101 pension accounts   $5.9 million over related allegations in a U.S. Department of Labor lawsuit.

Unfairly targeted

Nick-named “Dick,” Strong is choosy about his employees — favoring   hardworking, academically successful farm kids from the Midwest over Ivy League   MBAs. The company’s cafeteria is even run by a highly regarded former Milwaukee   restaurateur.

William Fitzhugh Fox, a lawyer who has known Strong for about 35 years, said   Strong couldn’t have made the improper transactions intentionally, and Spitzer   was unfairly targeting him.

“The problem is that the allegations stem not so much from a solid base   of law that would represent a black-and-white violation but a highly gray area   and one that represents a far wider practice,” he said.

Strong and his wife, Donna, also contribute to the Boys & Girls Clubs of   Greater Milwaukee, Milwaukee Youth Arts Center and the Milwaukee Ballet. They   have donated $61,500 to political candidates, mostly Republican, since 1993.

The Strongs, who have a son and two grandchildren, have lived in their $541,000   Brookfield home since they built it in 1972. They also have a home in Vail,   Colo.

Strong was born in North Dakota and as a teen moved to Minnesota with his younger   brother and his parents. His father was a county farm agent. His mother taught   piano.

His parents died when he was 17 — his father of a heart attack and four months   later his mother of cancer. Strong moved in with a dentist, whom Hannah said   soon became Strong’s surrogate father, to finish high school.

Despite the recent allegations, Hannah said he was confident Strong would prevail.

“When the smoke clears, Dick Strong will be hard at work,” he said.   “It’s a very tough business, very competitive and there are a lot of people,   for jealously or for whatever other motive, they like to see successful people   get blown up.”