SEC Settles with Prudential Broker

Former Prudential Securities broker and branch manager John S. Peffer has settled with the Securities and Exchange Commission, which claimed that he created false clients and shadow brokers to defraud dozens of mutual funds out of hundreds of thousands of dollars.The SEC case, settled in U.S. District Court in Massachusettes, accused Peffer of bilking funds companies and investors of more than $408,900.  He agreed to pay $50,000 in restitution, and admitted no guilt, as part of his settlement.  The agreement prohibits Peffer, of Newburyport, Mass., of engaging in business with any brokers, dealers or advisors, although he can apply anew for a licence. In November, 2003, the SEC filed a federal lawsuit claiming that Peffer led a group of five brokers in his scheme. The following year, in a revised complaint, the SEC claimed Peffer was part of a two-man operation. Together, the two brokers created false broker identification credentials.  Between January 2001 and September of 2003, Peffer made used these false identities to execute thousands of trades worth more than $300 million.  Peffer further circumvented scrutiny by creating multiple shadow accounts. In reality "The Peffer Group" had only two customers, according to the SEC. In all, "The Peffer Group" is liable for $408,904 in losses to funds and $39,384 in interest; however, Peffer produced evidence that he lacked the personal assets to cover those costs, and instead will pay $50,000 in fines and $1,734 in interest, according to the settlement finalized Dec.