Fidelity's DeSano Eased Aside to Product Development Slot

DeSano will become senior vice president of Fidelity’s Strategic New Business Development Group, which puts forward the firm’s new business ideas, according to a Boston Globe report.

The company refused to tell the newspaper whether DeSano’s reassignment was related to the gift and gratuities investigation, which in addition has resulted in 14 employees, including DeSano, being fined or disciplined.  Five traders also have left Fidelity since the investigations began last year.

For now, though, DeSano does not yet have a ”specific assignment” at his new position, spokeswoman Anne Crowley told the Globe.

The 44-year-old DeSano, is known for his bare-knuckled approached to bargaining, using Fidelity’s trading might to wring price concessions on stock trades from brokerage firms.  Under DeSano, Fidelity concentrated its trading business among fewer Wall Street brokerages that agreed to offer the firm better deals in exchange for potentially larger orders, the Globe said.  On any given day Fidelity accounts for as much as 5% of the trading volume on the nation’s two major exchanges, according to the Globe.

Fidelity’s trading reputation is getting a second look.  The Securities and Exchange Commission (SEC) is analyzing data submitted by Fidelity, trying to determine whether traders at the company sent business to those brokerage firms that offered the best goodies, and not necessarily the best deals on trades, the newspaper said.

Fidelity chairman and chief executive Edward Johnson III, his daughter Abigail Johnson, and former star investor Peter Lynch, recently were questioned by the SEC about whether they received tickets and other gifts brokers offered the firm. Separately, US Attorney Michael Sullivan in Boston is conducting a criminal investigation of the matter.

DeSano’s relocation was not a complete surprise.  In February, Fidelity installed five new managers under DeSano, with Crowley at the time saying the five will provide ”additional operation expertise to assist him in his overall management of the group,” the newspaper reported.