In response to the Securities and Exchange Commission's charge that one of its representatives improperly sold mutual fund B shares and that it failed to monitor its sale of various classes of mutual funds, Prudential Securities has agreed to pay $382,000. However, Prudential neither confirmed nor denied the allegations. The settlement broke down to $300,000 in civil penalties, and $82,000 in reparations to investors reportedly hurt by the companies' conduct.
In addition, the SEC has started proceedings against Robert Ostrowski, a former Prudential registered representative, and Rees Harris, a former Prudential branch office manager in Wilkes-Barre, Pa. Ostrowski is said to have misled investors in order to maximize his own returns, and Harris is accused of failing to properly supervise him.
According to the SEC, between 1998 and 2000, Ostrowski sold his customers more than $100,000 of class B shares without disclosing the existence of multiple classes of shares within the same fund. The SEC further suggests that the purchase of class A shares would have been a less expensive investment for Ostrowski's clients, who qualified for the share class' breakpoints. But he would not have received the same level of commission, the SEC charges. It is alleged that Ostrowski gained $51,000 in excess commissions, while Prudential received $63,000.
Copyright 2003 Thomson Media Inc. All Rights Reserved.