Nicole McDermott, former senior vice president of corporate services at Security Trust Co., pled guilty to securities fraud charges for allowing hedge fund clients to trade behind the bell, NY AG Eliot Spitzer said.

She faces a maximum of four years in prison. She was arrested on Nov. 25, along with CEO Grant Seeger and former President William Kenyon on charges of grand larceny, falsifying business records and securities fraud. The trio was charged with stealing millions of dollars in mutual fund shares by engaging in illegal late trading schemes.

McDermott admitted to directing STC employees to place a bulk of its orders for mutual fund shares on behalf of two hedge fund clients after the market closed, but still receive pre-4 p.m. prices. She also admitted to purposely disguising the illicit trades as orders for one of STC's client retirement plans.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

http://www.thomsonmedia.com http://www.mmexecutive.com

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.