Wachovia was advised of possible action on July 28, when the SEC said it would be looking intothat mutual fund trades made by a former Evergreen employee on behalf of an individual broker. According to the SEC allegations, these trades were in excess of limitations set forth in a mutual fund prospectus, Wachovia disclosed in the firm’s Form 10-Q filing with the SEC.
Specifically, the SEC’s proposed allegations relate to:
- The arrangement between the former Evergreen employee and an individual broker and mutual fund trades between December 2000 and April 2003.
- The purchase and sale activity from September 2001 through January 2003 by a former Evergreen portfolio manager in the mutual fund he managed at the time.
- The sufficiency of systems for monitoring exchanges and enforcing exchange limitations stated in mutual fund prospectuses;
- The adequacy of e-mail retention practices.
“Wachovia currently intends to make a written Wells submission explaining why Wachovia believes enforcement action should not be instituted,” the Charlotte, North Carolina-based financial services firm said in the filing.
In previous SEC filings, Wachovia disclosedthe SEC was investigating the mutual fund sales and distribution practices at Wachovia Securities LLC. Specifically, the SEC was looking into revenue-sharing arrangements between Wachovia and various undisclosed investment companies (See SEC Looking Into Wachovia’s Revenue-Sharing Practices ).