Fidelity in Settlement Talks With SEC Over Gift Probe

The Securities and Exchange Commission has begun talks with Fidelity Investments into the inquiry whether the acceptance of lavish gifts by traders harmed shareholders, according to The New York Times. In December, Fidelity paid $42 million to its mutual funds following an internal investigation into the matter by the funds’ trustees. The probe found that Fidelity failed to oversee traders who accepted expensive travel and entertainment gifts from brokers seeking to handle stock trades on Fidelity’s behalf. Attorneys, speaking on condition of anonymity because the investigation is ongoing, said a key issue in the settlement talks is whether the SEC will succeed in its debate that the gift giving harmed shareholders. Previous statements by the SEC indicated the regulator is focused on the question of harm, financial or otherwise. Fidelity has said publicly that it cannot be demonstrated that any Fidelity fund of shareholder suffered financial harm as a result. The company has taken the same stance in the settlement talks, attorneys said. Anne Crowley, Fidelity spokeswoman, said the company would not comment on its discussions with regulators. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.