Regulation

Broker-dealers don’t have to track every message sent through social media -- only ones that relate to business purposes. And unscripted interactions? They can be reported after they occur.

The Securities and Exchange Commission has approved the creation of an interim inspection program related to audits of brokers and dealers.

The Securities and Exchange Commission has approved the creation of an interim inspection program related to audits of brokers and dealers.

A senior employee known as an aggressive workaholic, but who seems stressed, yet rarely takes vacations, declines promotions and zealously protects his business unit from outside scrutiny while personally handling choice vendors may be up to something devious.

A former managing director of the Nasdaq Stock Market was sentenced today to 42 months in prison by a federal judge in Virginia.

The Securities and Exchange Commission has upheld an administrative judge's ruling that a mutual fund trader must pay more than $200,000 in penalties for accepting gifts from broker-dealers to steer trades their way. The regulator didn't buy the trader's excuse that the mutual funds weren't harmed.

SEC Slaps Mutual Fund Trader for Accepting Gifts From BrokersPrinter Friendly Email Reprints Reader Comments Share | August 9, 2011Chris KentourisThe Securities and Exchange Commission has upheld an administrative judge’s ruling that a mutual fund trader must pay more than $200,000 in penalties for accepting gifts from broker-dealers to steer trades their way.Like what you see? Click here to sign up for Securities Technology Monitor's weekly newsletter to get the latest news and analysis that matters to the effective operation of capital markets.The regulator didn’t buy the trader’s excuse that the mutual funds weren’t harmed.The SEC said that Robert Burns, a former equity trader at FMR Co., violated the Investment Company Act of 1940 by accepting the compensation from brokerage firms. Burns had to disgorge about $141,000 and interest of $67,205. He must also pay a civil penalty of $40,000. FMR is a subsidiary of Fidelity Management and Research Company that manages the Fidelity Investments group of mutual funds.Burns, who was dismissed by FMR in December 2004, sent orders to more than fifty brokerage firms. Of those fifty about ten gave him thirty nine gifts such as wine, travel and tickets to concerts, sporting events and theater productions. The gifts, according to the SEC included tickets to the Wimbledon tennis finals in 2002, 2003 and 2004; a case of 1993 Château Pétrus Pomerol wine in December 2003; tickets to see Prince, the Rolling Stones, Bruce Springsteen, Madonna, and several other performers in concert; tickets to games involving the Boston Celtics, Boston Red Sox and New England Patriots and tickets to theater events including "The Lion King," "The Producers," "Avenue Q," and "Hairspray."Burns did not dispute that he received the gifts but insisted that they did not influence his decisions. He argued that the SEC failed to prove that any fund was harmed by paying a higher commission rate than otherwise available so he did not violate the Investment Company Act.However, the SEC countered that Burns had to prove that he did not violate his fiduciary duty. And even if he could do so, he would have to prove the gifts were unrelated to his role as an equity trader.“The record shows and Burns does not contest, that he accepted numerous gifts from multiple brokers to whom he directed and continued to direct securities transactions on behalf of mutual funds to which he, affiliated with the funds’ adviser, owed a fiduciary duty,” wrote the SEC in its ruling on August 5. “We therefore conclude that the division has made a prima facie showing that, in accepting these gifts, Burns’ interest conflicted with that of the investment companies he was advising.”The case involving Burns is the tip of the iceberg in charges filed by the SEC against Fidelity and several of its senior-ranking traders, over the alleged acceptance of bribes in exchange for steering business to select brokerages.Vincent Loporchio, a spokesman for Fidelity in Boston, said that his firm has taken steps to enhance its policies and procedures concerning conflicts of interest."We adopted additional written standards of conduct related to business entertainment and acceptance of gifts; expanded the role of our ethics office responsible for regulatory compliance and established a new level of management oversight for our trading department," he said.

OppenheimerFunds is paying $100 million to settle a class-action lawsuit against two of its funds, the Oppenheimer Champion and the Oppenheimer Core Bond funds

The Securities and Exchange Commission in late July voted unanimously to require large trading firms to identify themselves, so their market activities can be tracked (see Money Management Executive, 8/1/11, page 4).

Barack Obama has missed his chance to see a director of the new Consumer Financial Protection Bureau take office within his first term as president.