Abusing power is nothing new. Neither is trying to get what you want. And neither, for that matter, is greed. Kind of makes you understand why so many policy makers are pushing for stronger compliance.
Sure, it may be only a $400 ticket to a U2 concert, or one impromptu night on a jet plane, but the facts show that it’s just a hop, skip and a massive lapse in moral judgment for the tally to include female escorts and dwarf tossing. Yes, you heard me. But that was a bachelor’s party, and it was 2005 when everything was so very different. Right.
Get some comfort in the fact that progress is being attempted. The SEC is pressing hard to source misuse, just tying up an investigation into gifts given to mutual funds focused on Peter Lynch, vice chairman and director of FMR CO, Fidelity’s investment management arm. Lynch will remain employed by Fidelity, and the SEC has settled its case accusing him of requesting that traders get him tickets to hot events topping a value of $15,948.
He neither admits nor denies culpability, but will pay the fee with interest and also an $8 million penalty. Scalpers must charge a lot to justify that.
The SEC has also begun administrative proceedings against traders at Fidelity who allegedly received more than $1.5 million in gifts. The idea that mutual fund managers could be bribed to send trades to firms regardless of service is dangerous and it’s not too difficult to think how that might harm investors.
Lynch doesn’t want to be lumped in with the other characters who’ve abused the use of jets etc. And Fidelity will hire an independent consultant to re-examine its policies. Gift-givers too are getting fined. One such company, Jefferies Group Inc, paid $10 million in 2006 to settle allegations with the SEC.
According to the SEC, Fidelity trader Thomas Bruderman, the ‘bachelor’ at the 2005 bachelor party was gifted ‘a bag filled with illegal drugs.’
He’s no longer with the company.
By Janine Armin
Corporate Secretary magazine