Akron Beacon Journal – Prudential’s brokerage subsidiary agreed Monday to pay $600 million in fines and restitution for deceptive market timing in trading mutual fund shares for wealthy clients.<\/p>\n
The settlement with the Justice Department is one of the largest resulting from a broad probe of market timing using computerized stock sales that has rocked the fund industry for the past three years. In 2004, Bank of America Corp. agreed to a $675 million deal.<\/p>\n
Prudential’s brokerage subsidiary, Prudential Equity Group. LLC, admitted to criminal wrongdoing from 1999 until September 2003 and agreed to pay the $600 million. The department agreed to withhold filing a charge of securities fraud if PEG and its parent, Prudential Financial Inc., honor a pair of agreements for five years.<\/p>\n
At least two dozen brokers at PEG or its predecessor, Prudential Securities, Inc., generated $57 million worth of commissions and more than $100 million in illicit profits for their clients between 2001 and 2003, the government said.<\/p>\n
It said thousands of computerized, late-market trades were generated on behalf of 15 Prudential clients, almost all of them hedge funds. These small, highly speculative funds typically require their wealthy clients to invest a minimum of $250,000 to more than $1 million.<\/p>\n