Scott A. Christian, a broker at the New York investment management firm Trautman Wasserman and Co. has pleaded guilty to charges of illegal late trading in mutual funds, the office of New York State Attorney General Eliot Spitzer announced late last week.
The Securities and Exchange Commission has also filed a civil injunction against Christian, alleging that the 29-year-old executed "ten of thousands of late trades for hedge fund customers and engaged in deceptive conduct to evade restrictions that mutual fund companies sought to place on his customers' frequent, short-term trading of mutual fund shares." The SEC also accuses Christian of creating false records to conceal the late trading.
Between January 2001 and September 2003, the SEC said, Christian time-stamped trading tickets just prior to 4 p.m. and then asked his customers if they would like to execute a trade using post-4 p.m. market information. The SEC wants Christian to repay the money, as well as a civil penalty, and is seeking to bar him from future jobs involving securities trading.
Christian faces up to four years in prison on the Spitzer charges. He is cooperating with the criminal investigation.