Former Fiserv Broker Agrees to Settlement of Market Timing Charges

Reuters reports that Thomas Gerbasio, who headed up Fiserv Securities’ New York office from August 2002 until April 2004, settled without admitting or denying any wrongdoing.   The Securities Exchange Commission (SEC) said Fiserv Securities’ New York office placed tens of thousands of market timing trades for select hedge funds and said Gerbasio defrauded hundreds of mutual funds and their shareholders by engaging in deceptive market timing practices for two hedge fund customers.

The SEC accused Gerbasio of a variety of deceptive practices, including misrepresenting the nature of hedge fund trades to the mutual funds, opening dozens of accounts under different names to conceal the customers’ identities from the funds, and entering trades in amounts designed to avoid the mutual funds’ detection triggers, Reuters said.   From August 2002 until November 2003, Gerbasio and his associate placed more than 37,000 market timing trades for the hedge fund customers, most of which, if not all, would have been rejected by the mutual funds without the fraud, the SEC said.

Gerbasio had been ordered to pay $540,044 in disgorgement and prejudgment interest, but all but $100,000 was waived under the final judgment.

Last year, Fiserv Securities Inc. agreed to pay $15 million to settle SEC charges of improper mutual fund trading (See Fiserv Securities Settles Over Market Timing and Late Trading Charges ).