In the regulatory filing, Oppenheimer did not disclose the names or number of employees who were notified by the Securities and Exchange Commission (SEC) that they could face civil charges, according to theStreet.com. The firm said two of the employees were supervisors who were still at Oppenheimer. The firm isn’t related to OppenheimerFunds.
The brokerage’s disclosure late Monday confirmed an earlier report on the Web site that an 18-month investigation of Oppenheimer by the US Securities and Exchange Commission and New York Attorney General Eliot Spitzer is nearing a conclusion.
According to the Web site’s earlier report, Robert Okin, an Oppenheimer executive vice president, and Marshall Dornfeld, a managing director, were two employees under regulatory scrutiny, according to people familiar with the inquiry. Regulators have focused on the two executives because of the role each played at Oppenheimer in overseeing abusive mutual fund trading by former broker Michael Sassano and his former team of 15 traders and junior brokers, the Web site said.
The firm’s SEC filing said the abusive mutual fund trading activities at Oppenheimer occurred “largely during the period” that the brokerage group was part of CIBC World Markets, a division of Canadian Imperial Bank of Commerce. I t said the activities were limited to a “single branch.”
Sassano and his team were the only brokers at Oppenheimer permitted to engage in mutual fund market-timing, one of the abusive trading practices at the heart of the investigation. In his heyday, Sassano was one of the top market-timing brokers on Wall Street, according to the Web report.
Regulators believe that much of Sassano’s abusive trading in shares of mutual funds was sanctioned by members of Oppenheimer’s management, who saw it as a potential profit center, according to the Web site. A year ago, Oppenheimer suspended Sassano and disbanded his 15-member team. By the end of December, all of the Sassano team members had left the firm.