BOSTON (CN) - An equity trader for Fidelity Management & Research Co. and a registered rep at Capital Institutional Services defrauded Fidelity and its clients by using inside information to make $231,000 by trading ahead on shares of Covad Communications Group, the SEC claims in Federal Court.
The SEC sued David K. Donovan Jr., an equity trader at Fidelity subsidiary FMR Inc., and David R. Hinkle, for actions they allegedly took in the summer of 2003. The two are accused of getting from Fidelity's database confidential information that Fidelity would keep buying large amounts of Covad share, and trading ahead on the information by buying their own Covad shares.
Donovan allegedly entered Fidelity's database 107 times, and requested, and was denied, permission to trade Covad stock on his own account. He is accused of trading in Covad shares in his mother's name, and of tipping off Hinkle, who also traded.
The complaint cites emails the men allegedly exchanged.
Hinkle profited by $141,035, and Donovan's mother's account profited by $89,775, the complaint states.
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