The conflict of interest/mutual-fund scandal continues to play itself out. How does one win the trading business of a big mutual fund? Take some traders and executives to, say, the Super Bowl. Well, that was business as usual in those glorious, bull-market days of yore.
Today, the SEC said it had charged 13 current and former employees of Fidelity Investments—including legendary Magellan manager Peter Lynch—for “improperly accepting” $1.6 million in “travel, entertainment and other gifts paid for by outside brokers courting” Fido’s “massive trading business.”
The SEC release states that various conflict-of-interest/best-execution laws were ignored when Fido employees accepted “a host of travel, entertainment and other gifts paid for by outside brokers, including private-jet trips to such places as Bermuda, Mexico and Las Vegas, and premium sports tickets to events including Wimbledon, the Super Bowl and the Ryder Cup golf tournament.”
Lynch and two others settled the case, without denying or admitting guilt. Fidelity consented to an $8 million fine, without denying or admitting guilt. The other 10 are still facing charges.
