How will Robert Gates, nominee for Defense Department Chief handle the “settlement” by Jeffries & Co. over bribing Fidelity brokers with golf trips and expensive gifts in return for trades? Gates is the Chairman of The Fidelity Funds which is yet to be named in a case. Jeffries settlement came with the usual white collar crime statement. “The company/executive neither admits nor denies wrongdoing.”
The trading exchanges prohibit gifts over a certain value, $100 in the case of NASD and mutual funds advisors are required to disclose potential conflicts of interest. The Jeffries Vice President at the center of the bribing scheme had been hired in 2002 to increase trading with Fidelity. They even gave the executive a $1.5 million travel and entertainment budget.
What kind of behavior did this ample budget fund? The Jeffries employee allegedly showered the fund traders with expensive golf outings, flew them on private jets to locations like Bermuda and Puerto Rico, put them up at swank hotels. In addition he gave them golf merchandise and tickets to major sporting events - including the Super Bowl and the Wimbledon tennis tournament in England, Broadway shows and concerts. The executive even paid more than $75,000 for a limousine service and private jets for several Fidelity traders from Boston who were guests at one trader's bachelor party in Miami, according to the regulators.
The practice, which disregards investors' interest, is said to be widespread in the brokerage industry. Boston-based fund giant Fidelity Investments said it could face action from the SEC in an investigation of whether its traders sent company business to brokerage firms that offered gifts and gratuities, rather than to firms offering the best trading deals. As a result of the investigation more than a dozen Fidelity employees have been disciplined and at least five traders left the firm.
Fidelity spokeswoman Anne Crowley declined comment on the Jefferies settlements. Yet Fidelity’s role in this should be publicly addressed given their Chairman’s nomination. Will Mr. Gates be asked about this matter by any U.S. Senators?
Will he comment on the record about this matter? Likely no, as most untoward things are done by underlings a la Abu Ghraib. Never mind the systemic nature of bribing and influence buying in our democratic, free market world. Jeffries & Co. got off “Scott free” by paying $9.7 million in fines. What message does this send to white collar criminals? If you do the crime, you might have to pay the fine…
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