Calugar, Security Brokerage to Pay $153M to Settle SEC Charges

Daniel Calugar, the former owner of the broker/dealer Security Brokerage, agreed to pay $103 million in ill-gotten gains and a civil penalty of $50 million to settle charges of late trading and market timing, the Securities and Exchange Commission announced Tuesday. The civil penalty is the largest that the SEC has imposed on any person or company in the mutual fund trading scandal to date.

Calugar and his firm, which closed its doors in November 2003, consented to the judgment before the United States District Court for the District of Nevada without admitting or denying the allegations. Calugar also agreed to be permanently banned from working at any broker/dealer.

The SEC said Calugar made roughly $175 million in late trading and market timing between 2001 and 2003, primarily in Alliance Capital and Massachusetts Financial Services mutual funds.

"Daniel Calugar's late trading was phenomenally profitable to him and came at the expense of long-term mutual fund shareholders," Linda Chatman Thomsen, director of the SEC's division of enforcement, said in a statement. "The magnitude of this settlement reflects both the seriousness of the wrongdoing and the Commission's resolve to hold accountable those who defraud mutual fund shareholders."

With the $72 million that Calugar previously paid in a class-action lawsuit, the SEC says that he has now returned all of his ill-gotten gains.