Former Officials at Charged With Securities Fraud

March 15, 2004 (—Three former officers at, a Dallas broker-dealer, have been charged with conspiring to commit securities fraud related to market timing of mutual-fund trades, according to Dow Jones.

Richard Sapio, former CEO of, former president Eric McDonald, and former compliance officer Michele Leftwich each face up to five years in prison and a fine of $250,000.  

According to the complaint filed by the U.S. Attorney’s office in New York, ignored warnings from fund companies about the harm certain practices had on other investors, and helped select investors, such as hedge funds, market time and late-trade in mutual funds. used strategies specifically designed to evade any restrictions by the fund companies, including assigning multiple account numbers to the same clients, using multiple clearing firms to carry out trades, as well as using their affiliated broker dealers to carry out trades, Dow Jones reported.

In December, the three were named in a Securities and Exchange Commission (SEC) civil securities fraud complaint, although that complaint did not claim that allowed clients to market time trades in their own funds, Dow Jones said.

According to documents on file with the SEC, Sapio and McDonald stepped down as portfolio managers in the company’s four Generation Wave funds of funds in February.

In a statement released by the company, said the former executives have cooperated with officials.