Former Pru Brokers Seek Hearing Officer Recusal

May 26, 2004 ( - Attorneys representing former Prudential Securities brokers accused of improper mutual fund trades, along with federal prosecutors, plan on asking the cases hearing officer to recuse herself.

An attorney representing the former manager of Prudential’s Boston branch, Steven Fuller, has filed a motion asking that Diane Young-Spitzer recuse herself from the case.   This came after Young-Spitzer, associate director in the office of Massachusetts Secretary of State William Galvin, was assigned to hear the administrative proceedings against seven former Prudential employees, according to a Reuters report.

>Other lawyers familiar with the case told Reuters the request was made due to a conflict of interest.   No further elaboration as to what the conflict of interest may entail was provided in the report.   However, a spokesman for Galvin told Reuters it was customary for employees of the state’s securities division to hear administrative cases and that no conflict of interest existed.

In addition to the recusal request, U.S. Attorney Michael Sullivan is expected to ask that the proceedings against the former brokers be put on hold until the fall and that he be allowed to “intervene” in the case.   This is to ensure Galvin’s administrative case does not interfere with the federal investigation.

The legal action stems from a complaint filed by Galvin last November, charging Prudential Securities with widespread late trading of mutual funds, after the firm ignored former brokers in its Boston office who carried out more than 1,100 late-trading transactions in the past 2 1/2 years with a total value of more than $162 million (See   Prudential Securities Charged with Late Trading).