The SEC today filed a civil fraud suit in U.S. District Court in Boston against six former Prudential Securities employees, claiming they were market-timing trades in numerous mutual funds. Former brokers Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer and Marc J. Bilotti were named in the suit; Robert Shannon, a former Prudential branch manager, was also accused of assisting the brokers by approving their market-timing trades.
Separately, William F. Galvin, Massachusetts state secretary, today named four of the former employees in a civil suit for allegedly allowing select hedge fund clients to engage in rapid-fire trading of mutual funds. The complaint named Messrs. Druffner, Ficken, Ajro and Shannon, along with former branch manager Michael Vanin. Mr. Galvin said the complaint shows "how a group of brokers, with the active connivance of managers and a see-no-evil attitude by the company, were able to manipulate the mutual fund trading system for the benefit of certain select clients to the detriment of fund shareholders."
Prudential Securities is now a unit of Wachovia Securities; the alleged trading abuses occurred before the acquisition. Officials at Wachovia could not be reached by press time for comment.