New Jersey regulators last Tuesday revoked the licenses of three former Merrill Lynch brokers accused of fraud for conspiring with a hedge fund to make tens of thousands of market-timing trades netting $60 million for the fund.

Peter Harvey, the attorney general, also filed a complaint seeking monetary penalties from the trio, known as the "CBS Group," which consisted of Christopher Chung of Edgewater, N.J., Kevin Brunnock. of Fort Lee, N.J., and William Savino, also of Fort Lee.

The revocations came just one week after Merrill agreed to pay $10 million to New Jersey and $3.5 million to Connecticut to settle charges that it failed to supervise the three brokers who engaged in abusive trading practices. It also agreed to adopt a series of oversight reforms.

More than one-third of the trades were made in 40 mutual funds held as sub-accounts of variable annuity contracts purchased for hedge fund Millennium Partners. In order to disguise their inappropriate trades, the advisers used multiple accounts, under-the-table agreements and other shady methods.

Merrill fired the three financial advisers in October 2003 and fined their supervisors after repeated warnings to curb their behavior. However, regulators ultimately determined that Merrill did not do enough to enforce its timing policies and prevent harm to shareholders.

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