Ex-Fidelity traders fined $1M for taking swag

Dec 11, 2008 @ 2:34 pm

By Sara Hansard

Eight former employees of Fidelity Investments will pay more than $1 million in total for improperly receiving travel, entertainment and gifts paid by outside brokers courting business from the giant Boston-based mutual fund company, the SEC announced today.

The Securities and Exchange Commission instituted administrative proceedings in March against 10 former Fidelity employees, including the former vice president and head of the trading desk, Scott E. DeSano.

The orders issued today found that Mr. DeSano and former Fidelity equity traders Timothy J. Burnieika, David K. Donovan, Edward S. Driscoll, Jeffrey D. Harris, Christopher J. Horan, Steven P. Pascucci and Kirk C. Smith violated securities laws by accepting prohibited compensation from brokers.

The perks included private jet trips, lodging and premium sports tickets.

Furthermore, the SEC found that Mr. DeSano was a cause of Fidelity’s not getting best execution of trades for its clients. That was not disclosed, and Mr. DeSano failed to supervise the traders, the SEC wrote in a statement.

“Employees of money managers must keep the clients’ interest paramount and avoid putting their personal interests at odds with those of the investors they serve,” SEC Boston regional office director David Bergers said in the statement.

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