The branch manager at Prudential Securities’ Boston office and five brokers there were forced out Monday, sources said yesterday, after the office was targeted by state and federal probes intoimproper mutual fund trading.<\/p>\n
The manager, Robert E. Shannon, was asked to resign, sources said. Five other brokers were forced to resign too, Michael Collora, a lawyer for the five, confirmed yesterday.<\/p>\n
“They felt they had complied with company policies, and the company disagreed,” Collora said. “We feel ultimately they will be vindicated.”<\/p>\n
Shannon could not be reached last night.<\/p>\n
The sacking of the six came amid ongoing probes of fund-trading activity in the Hub office by Secretary of State William Galvin’s securities enforcement staff and by the U.S. Securities and Exchange Commission. Both were looking into whether Prudential brokers in Boston had engaged in improper short-term fund trading.<\/p>\n
Tony Mattera, a spokesman for Wachovia Securities, said he couldn’t comment specifically about the sackings. Prudential Securities became a unit of Richmond, Va.-based Wachovia Securities in July.<\/p>\n
However, Mattera said Wachovia regularly reviews its operations to ensure it acts in the best interests of its clients. “In the course of conducting those reviews, we occasionally are compelled to take action,” he said.<\/p>\n
Besides Shannon, others forced out were Martin Druffner, Marc Bilotti, Skifter Ajro, John Peffer and Justin Ficken.<\/p>\n
Several Prudential brokers in New York were also forced out, sources said.<\/p>\n
Galvin has been investigating whether brokers made short-term trades to take advantage of delays in the way funds are priced. The method, a form of market timing, isn’t illegal, but many mutual funds pledge to deter market timers because their actions could hurt fund returns for long-term investors.<\/p>\n
State and federal officials declined to comment yesterday on the actions at the Prudential office.<\/p>\n
The brokers’ jobs are the latest casualties in a scandal that’s shaken the mutual fund industry since New York Attorney General Eliot Spitzer accused several big fund firms last month of allowing improper trading.<\/p>\n
Spitzer said a hedge fund was allowed to make illegal late trades at prices not available to other investors among Bank of America’s funds. That hedge fund also was allowed to make short-term trades in funds run by Bank of America, Bank One, Janus Capital Group and Strong Capital Management, Spitzer alleged.<\/p>\n
Several Bank of America employees have already lost their jobs because of the scandal, and one broker faces criminal charges.<\/p>\n
Janus, in a filing with the SEC, reportedly earned $1 million from 12 arrangements that allowed special trading, including four that permitted short-term trades. All of the arrangements have ended, and some workers “central” to the activities are gone, Janus said.<\/p>\n","protected":false},"excerpt":{"rendered":"
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