Gifts to Fidelity traders could result in an SEC civil lawsuit

0 Comments | USA TODAY, July, 2005 | by John Waggoner

The Securities and Exchange Commission is considering a civil lawsuit against Fidelity Investments because of gifts its traders received from brokerage houses, the company said Monday.

The SEC has been investigating gifts to employees on Fidelity's trading desk since November. Traders execute the trades ordered by mutual fund managers and are supposed to try to steer trades to brokers with the best execution and lowest commissions, not those who offer the best gifts.

The SEC had no comment on the investigation, and Fidelity says its own investigation has uncovered no harm to shareholders.

But Fidelity has disciplined 16 traders, and five have left the company since the investigation began. Its top trader, Scott DeSano, was reassigned to Fidelity's Strategic...