Investigators sent a second notice to Fidelity Investments last Thursday informing them of their ongoing investigation into traders at fund giant accepting improper compensation in the form of gifts and sumptuous entertainment.

The Security and Exchange Commission also notified Fidelity traders, directly, that they may actually face charges for the supposed violations, one of the trader's attorneys told The Boston Globe.

 

Anne Crowley, spokesperson for Fidelity, told The Globe that this is the second Wells Notice that the firm has received in three months. The SEC notice does not conclude that there has been any wrongdoing. Instead, it is a mere warning of what charges may be brought forth against the company. "We intend to vigorously defend ourselves against any allegations we believe are not supported by the relevant facts and data," Crowley said. She added that Fidelity is cooperating with the SEC.

Separately, Fidelity has announced the hire of Brian Conroy as head of global equity trading, replacing Scott DeSano who was one of 14 Fidelity employees who got the boot for breaking company gift policies last year.

Crowley told The Boston Globe that Conroy's hire is a move that intends to change Fidelity's stock-trading operation, since the scandal last year. In addition to his hire, the firm has also strengthened procedures in the department to prevent these types of thing from reoccurring in the future, for example, Fidelity has placed five new managers into the division.

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.