Galvin’s complaint, which detailed how the alleged market-timing and late-trading scheme worked, seeks restitution and an unspecified fine, according to a report in the Boston Globe. The complaint charges that the brokers hid their trades by linking them to fake order numbers, different branch codes, misspelled or false names, and altered faxes that, although sent after the close of the markets, listed the trading price at the 4 p.m. closing.
The three former brokers, Martin Druffner, Justin Ficken and Skifter Ajro, referred to in the latest complaint as the “Druffner Group,” and office managers from the Boston office were charged with fraud related to market timing earlier this fall, but although named, were not charged in the latest complaint.
Galvin’s complaint says that executives knew about the illegal trades, but, because the commissions were so large, ignored them. However, Prudential, which said it hadn’t yet seen the complaint, nonetheless noted that it didn’t involve trading in Prudential’s own mutual funds, but Prudential brokers who were buying other mutual funds.
Prudential Securities is also under investigation by the US Securities and Exchange Commission, as well as New York Attorney General Eliot Spitzer and the National Association of Securities Dealers.
State and federal investigators continue a widespread probe of the mutual fund industry focusing on late trading and market timing.
A copy of Galvin’s complaint is at http://www.state.ma.us/sec/sct/sctpru/pruidx.htm .