Fidelity Investments is gearing up for a fight with federal regulators now questioning a business relationship between a pair of siblings who handle a fraction of the fund giants trading business, The Boston Globe reports.
Fidelity trader David K. Donovan and his younger sibling, Peter Donovan, an employee of Bank of America Securities, are under investigation for forging an improper business relationship, attorneys close to the case said.
Regulators are now attempting to determine whether the brothers bilked Fidelitys shareholders by conspiring to negotiate overpriced transactions in technology stocks. David Donovan is a leading technology trader at Fidelity.
The probe is another warning shot for Boston-based financial service firms that are on notice for pending crackdowns on incestuous deals that potentially compromise investors interests.
The Securities and Exchange Commission launched probes earlier this year into improper gifts exchanged between Fidelity and a number of firms that receive part of its brokerage business.