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Monday, June 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

SEC Settles With Fidelity Investments

WASHINGTON (CN) - The SEC charged Fidelity Investments and 13 employees, including top executives, with improperly taking more than $1.6 million in gifts from brokers seeking business from the mutual funds Fidelity manages. In its settled Order, the SEC found that Fidelity allowed the gifts, and "romantic relationships with brokers" to influence its mutual funds transactions, against its clients' best interests.

The agency fined Fidelity $8 million, ordered it to knock it off, and told it to hire an independence compliance consultant.

Among the executives involved were Scott DeSano, former senior vice president and head of global equity trading; senior vice president Bart Grenier; and vice chairman Peter Lynch, who formerly managed Fidelity flagship Magellan Fund.

Lynch, author of well-known books including "Beat the Street" and "One Up on Wall Street," and whose charitable foundation reported assets of $74 million in 2003, was ordered to disgorge ill-gotten gains of $15,498, plus interest, for free tickets he got to concerts, theater and sporting events. He got the tickets from brokers, through requests to two traders on Fidelity's equity desk. He and Grenier settled without admitting or denying the charges.

Also charged were current or former Fidelity equity traders Thomas H. Bruderman, Edward S. Driscoll, Timothy J. Burnieika, Robert L. Burns, David K. Donovan, Jeffrey D. Harris, Christopher J. Horan, Steven P. Pascucci, and Kirk C. Smith. Former Fidelity equity trader Marc C. Beran settled charges against him without admitting or denying them.

Among the gifts the Fidelity employees accepted were trips on private jets to Bermuda, Las Vegas, and Mexico and trips to Wimbledon, the Super Bowl and the Ryder Cup.

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