While unnamed in the Fidelity release, one of the brokerage firms in question is widely believed to be Jeffries & Co., which agreed earlier this month to pay roughly $10 million to settle a similar gift-giving probe launched by the Securities and Exchange Commission and National Association of Securities Dealers. That payment was also tied to gift-giving and entertainment, including a comedic dwarf, provided by Jeffries during a bachelor party hosted for a star Fidelity trader.
Martin conducted interviews with top Fidelity employees, "reviewed e-mails and other communications among traders and brokers, and reviewed testimony that was taken in the course of the SEC inquiry into this matter," to compile his report, Fidelity said. He concluded that it was statistically impossible to say if the gift giving resulted in any excessive execution costs for Fidelity's traders, but did say certain traders misdirected order flow to an "approved" broker list.
In a separate prepared statement, Fidelity chairman Ned Johnson III said the company has moved on from the scandal and taken appropriate action to remedy the situation. "Some were fined, some have left the company, none who were involved in serious misconduct are associated any longer with equity trading at Fidelity" he said.
The settlement includes a payment of $40.7 million, plus interest and related expenses tied to the internal investigation. In total, those costs should exceed $42 million, the company said.
Johnson also said that related investigations at the SEC and NASD are also ongoing, and that Fidelity has cooperated fully with those reviews.
Fidelity, headquartered in Boston, is one of the world's largest money managers, boasting over $2 trillion in assets under management and custody. The company operates a regional center in Covington, with more than 2,900 employees. Another 900 work at a call center in Blue Ash.
