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For Immediate Release
May 20, 2004 Contact: Cheryl Weiss
(608) 264-7875

Wisconsin Department of Financial Institutions Reaches Settlement with Richard S. Strong

Settlement results in $140 million for investors

(Madison) Secretary Lorrie Keating Heinemann today announced a settlement agreement between the Division of Securities of the Wisconsin Department of Financial Institutions (DFI) and Richard S. Strong resulting from the investigation of his trading activities at Strong Capital Management. The allegations of improper trading by Strong came to light as part of an investigation that began with the Canary Hedge Funds' market-timing practices revealed in September 2003. "The settlement reached today with Richard Strong and his firm, Strong Capital Management, will return $140 million to investors and set up a strict corporate governance structure at Strong to ensure that these activities do not happen again," Secretary Keating Heinemann said.

Under the terms of the settlement, the DFI Division of Securities will revoke Richard Strong's Investment Adviser Representative and Securities Agent licenses as well as the licenses of Thomas Hooker and Anthony D'Amato. The settlement also puts controls in place at Strong Capital Management to guard against improper trading in the funds.

The Wisconsin DFI settlement is based upon evidence that Strong was allowed to frequently trade in his personal accounts in multiple Strong Funds. The DFI investigation confirmed that Strong's trades in these funds were inconsistent with the long-term investment strategies outlined in the funds' prospectuses.

Pursuant to the enforcement actions of the Wisconsin DFI, New York Attorney General and the Securities and Exchange Commission ("SEC"), Richard Strong and Strong Capital Management agreed to pay $140 million to be distributed back to investors. The SEC order calls for an independent distribution consultant to oversee the distribution of the restitution funds to investors. "As the primary regulator for mutual funds, the SEC is the appropriate authority to handle this restitution process," Patricia Struck, Administrator of the DFI Division of Securities, explained.

"We are pleased to bring closure to this investigation for Wisconsin investors and to announce that under the settlements reached today, all penalty monies will be returned to investors in the Strong mutual funds" DFI Secretary Lorrie Keating Heinemann stated. Wisconsin investors represent approximately 20 percent of the $27.4 billion Strong Capital Management has under management. "Considering the number of Wisconsin investors in Strong funds, this settlement reflects the focus on investor protection that is our goal here," Keating Heinemann added. "I would especially like to thank DFI attorneys Patricia Struck and David Cohen, as well as Eric Wilson in the Wisconsin Attorney General's office for their professionalism and expediency in handling this investigation," she added.

This enforcement action has been coordinated with the Securities and Exchange Commission and The Office of the New York Attorney General.

The DFI Division of Securities has jurisdiction over 90,632 licensed securities agents, 1,817 broker-dealers, 186 state licensed investment adviser firms and 1,234 investment adviser representatives. In 2003, the Division of Securities at DFI issued 213 administrative orders resulting from 86 separate investigations and returned over $4 million to Wisconsin investors.