Lawyers, Drugs and Money: Consuelo Marquez, an ex-Lehman Brothers broker who worked at the firm from 1995 to 2000, pleaded guilty in federal court in Manhattan in August to conspiring to launder roughly $11 million in drug money for a former Mexican governor. Ms. Marquez, while working for Lehman, helped Mario Ernesto Villanueva Madrid, then governor of the Mexican state of Quintana Roo, stash drug money at the firm in several brokerage accounts under the names of shell companies in the British Virgin Islands. Madrid was arrested in 2001 and awaits extradition to the U.S. Marquez, who faces up to 10 years in prison, is to be sentenced in January.
More Market-Timing Fallout: Martin Druffner, a former Prudential broker, was charged with four counts of wire fraud and four counts of securities fraud in Boston federal court in late August. Druffner was charged for fraudulent market timing of mutual funds while working in Pru's Boston branch from 1998 to 2003. He and his partners allegedly placed $1.3 billion in market-timing trades for hedge fund customers, using aliases and multiple account numbers to conceal their identities, If convicted, Druffner faces up to 20 years in prison and fines for each count of fraud.
Bank of America in Hot Seat: The SEC has been examining Bank of America's brokerage unit, according to a company disclosure in September, and it doesn't like what it's finding. In a regulatory filing, the company said the SEC has been conducting a formal investigation into trading and research at Banc of America Securities, specifically in its San Francisco office between 1999 and 2002. The filing says the SEC plans to recommend enforcement action against the firm for improper stock trading.