Prudential Securities fired a dozen
brokers and managers in its Boston and New York offices after
regulators alleged that some brokers traded in and out of mutual
funds for quick profits at the expense of long-term investors,
people familiar with the situation said.
The employees included Robert Shannon, manager of its Boston
office, and Boston brokers Martin Druffner, Justin Ficken, Marc
Bilotti, John Peffer and Skifter Ajro, their lawyers said.
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Prudential, part of the third-largest U.S. brokerage by assets,
also dismissed six employees in two offices on Long Island and in
Manhattan, a person familiar with the matter said.
Prudential was the fourth company to fire or suspend
employees since New York Attorney General Eliot Spitzer last
month started a probe of the $6.9 trillion mutual fund business.
He has accused companies including Bank of America Corp. of
giving New Jersey hedge fund Canary Capital Partners LLC improper
trading advantages in exchange for investing in their funds.
“Every organization in the business is turning over every
stone, making sure everything is in order,” said Robert
Reynolds, vice chairman and chief operating officer at Fidelity
Investments, the biggest U.S. mutual fund company, at a news
briefing in New York.
Massachusetts Secretary of the Commonwealth William Galvin
alleged last month that Prudential brokers in Boston violated
securities laws by making short-term trades in mutual funds for
some customers at the expense of long-term investors.
Spitzer, the NASD and the Securities and Exchange Commission
also are investigating Prudential, the company has said.
Prudential Securities became part of Wachovia Securities on
July 1, when life insurer Prudential Financial Inc. sold it to
Wachovia Corp. in a cashless transaction, keeping a 38 percent
stake in the combined brokerage. The new entity has 12,000
brokers in 700 offices and 330 bank branches.
Bloomberg News
