Fidelity Served With Wells Notice
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The Securities and Exchange Commission is considering civil against mutual fund giant Fidelity Investments. The investigation, disclosed last year, centres on whether employees improperly accepted gifts or entertainment from brokers. A Wells notice has been served against the company from the Boston Office of the SEC. No current Fidelity employees have been served with such a notice. The Wells notice indicates that the agency is preparing action against the company. Fidelity now has a chance to refute any accusations. Fidelity's unit that manages stock funds actually received the notice. The company has been cooperating with the Securities and Exchange Commission and all other inquiries concerning gifts and gratuities, Fidelity said in a statement yesterday. "We intend, however, to vigorously defend ourselves against any allegations that we believe are not supported by relevant facts and data." Fidelity said that an internal review had "uncovered instances where there were violations of the company's policies and procedures." No mutual fund investors were harmed by this behaviour, according to Fidelity. 16 traders have been disciplined and five executives have left the company. Scott DeSano, the stock trading chief has been shifted sideways. The initial spark came from a routine query by NASD. Brokerage firms were asked about their gift and entertainment policies. The SEC has joined the NASD in investigating the matter.
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