A.G. Edwards will pay the Securities and Exchange Commission $3.86 million to settle charges that it failed to supervise brokers who used deceptive means to engage in mutual fund market timing. The fine includes a civil penalty of $1.5 million and $2.36 million in disgorgement and interest.
The firm also agreed to hire an independent consultant to review whether the changes it has made to its policies and procedures should prevent and detect future market timing activity.
Although the Commission has settled with one former A.G. Edwards broker, Charles Sacco, it has opened proceedings against another one of the firm’s brokers and two branch managers, Thomas Bridge, James Edge and Jeffrey Robles.
The SEC said that brokers in several of A.G. Edwards’ offices engaged in market timing between January 2001 and September 2003.
Merri Jo Gillette, regional director of the SEC's Chicago Regional Office, said: "By failing to develop or adopt reasonable policies to prevent its registered representatives' misconduct, A.G. Edwards ignored its responsibility to reasonably supervise its registered representatives."