Market Timers Penetrate Fidelity Institutional Platform

Published July 15, 2004, 1:00 a.m. EDT

Updated July 15, 2004, 1:00 a.m. EDT

1 Min Read

Market timers succeeded in penetrating at least one institutional fund at Fidelity Investments, which has boasted a pristine record of defending individual shareholders by repulsing rapid trading activities, TheStreet.com reports.

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According to a report by TheStreet.com, Michael Sassano, a broker at Oppenheimer , made frequent short-term trades of non-Fidelity funds through the discount supermarket kings $106 billion institutional platform on behalf of his hedge fund clients. Fidelitys institutional mutual fund platform is the hub of its investment advisory group, which caters to 2,100 institutional clients. An insider who is knows Sassano said Fidelity knew his plans to rapidly trade mutual funds when he joined their platform.

Inconsistent supervision on the Fidelity institutional platform made it possible for Sassano to profit by creating an arbitrage between foreign and domestic mutual funds. Market timing is technically legal if the number of trades does not exceed the limit stated in a mutual funds prospectus. Sassano, 33, who gained access to the fidelity platform in the 2002 when Oppenheimer was owned by Canadian Imperial Bank of Commerce, is now under investigation by the Securities and Exchange Commission, the National Association of Securities Dealers and other regulators. Trading reports indicate that he previously generated $15 million per year of commissions by market timing.

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