Fiserv, which provides transaction processing and other back-office functions for broker-dealers, is being investigated by the U.S. Securities and Exchange Commission (SEC) for allegedly clearing improper trades for broker-dealers who were clients, CEO Leslie Muma said. Most of the activity being investigated came from the clearing business that Fiserv bought in 2002 from Investec Ernst & Co., Muma continued, according to an Associated Press report.
The $4 million to $5 million Fiserv said it made on the trades in question came from transaction fees paid by broker-dealers. “It was for the most part several hedge funds that will go nameless, a total of probably four or five customers a very tiny part of Fiserv’s business,” Muma said.
As a result of both the SEC investigation and Fiserv’s own review, Muma said the Brookfield, Wisconsin-based firm has fired or reassigned about a dozen employees. Additionally, Muma said Fiserv has put in much better controls to prevent market timing and late trading activities, which are being investigated by the SEC.
Depending on the course of the SEC’s investigation, the firm could be subject to fines or other penalties by the SEC. The company has been cooperating with the SEC, Muma said.