The SEC and NASD today each announced separate settlements with broker-dealer Jefferies & Co. over what the SEC announcement called "illegal gratuities" paid to a mutual fund firm's traders to win their business, thereby aiding and abetting "violations" committed by the mutual fund firm's employees. The NASD identified the traders as working for Fidelity; the SEC announcement did not name the employer, but today's SEC announcement was the first time the agency indicated the traders had violated the law.
Under the settlement with the SEC, Jefferies agreed to payment of $4.2 million in disgorgement, plus prejudgment interest. The broker-dealer separately agreed to pay a penalty of $5.5 million to NASD. David P. Bergers, the district administrator of the SEC's Boston District Office, declined to comment. Fidelity spokeswoman Anne Crowley said Monday's settlement was between the SEC and Jefferies, and Fidelity continues to cooperate fully with the SEC's ongoing investigation of Fidelity and its traders. She noted none of the traders referenced in the NASD announcement have worked on Fidelity's trading desk for well over a year, and many are no longer Fidelity employees. She said any trader who allowed himself to be influenced by gifts would have "clearly violated Fidelity policies," and noted that other factors, including expanded services and coverage by Jefferies, could explain decisions by Fidelity to funnel business to the broker-dealer.
Jefferies spokesman Tom Tarrant wasn't immediately available for comment.