10 Mar, 2008
Nicholas Paler | 09:34:56 | 10 March 2008
Lynch has apologised for asking Fidelity's equity trading desk for
help in acquiring free tickets to various sporting events.
Former fund manager Lynch, who was charged alongside 12 other
employees for improperly accepting more than $1.6 million
£800,000 in gifts from brokers, said in a statement that he
lamented his actions.
He said: 'In asking the Fidelity equity trading desk for occasional
help locating tickets, I never intended to do anything
inappropriate, and I regret having made those requests.'
The statement came following the revelation that US regulator the
Securities and Exchange Commission (SEC) had fined Lynch and his
colleagues as well as Fidelity Investments.
The company itself was charged a total of $8 million in a
settlement of claims stating that it let staff accept gifts such as
tickets to the Super Bowl and to see British band U2.
The SEC said the firm failed to seek 'best execution' - the most
favourable terms reasonably available - for its clients' mutual
funds securities transactions.
Lynch himself, who was charged alongside individuals such as former
senior vice president Scott DeSano, has been ordered to pay $15,948
as well as interest of $4,183.
'The order requires Lynch to cease committing or causing any
further violations and to pay $15,948 in disgorgement - equalling
his ill-gotten gains - and prejudgment interest of $4,183,' the SEC
The SEC added that the gifts, which also included theatre tickets,
had compromised the firm's broker selection process.
'The broker selection process on Fidelity's equity trading desk was
compromised when gifts and lavish entertainment swayed the flow of
brokerage business,' it said.
'This misconduct created a serious risk of investor harm and
violated Fidelity's duty of allegiance and loyalty to investors.'
Under the terms of the charge, the firm must now hire an
independent compliance consultant to conduct a comprehensive review
of its current policies and procedures concerning equity trading
operations, conflicts and gifts.
Fidelity recognised the charges brought against it, noting the
seriousness of the misconduct, but neither admitted nor denied the