Daniel Calugar, who ran a registered broker-dealer business, has agreed to pay more that $150 million to settle fraud and market timing charges with the Securities and Exchange Commission. The fine is the largest ever imposed on an individual in a late-trading or market-timing case, according to Randall Lee, director of the SEC's Pacific regional office.
As part of the settlement, Calugar, owner of Las Vegas-based Security Brokerage Inc., will disgorge $103 million in gains and pay a $50 million civil penalty.
"Daniel Calugar's late trading was phenomenally profitable to him and came at the expense of long-term mutual fund shareholders," said Linda Chatman Thomsen, director of the SEC's enforcement division, in a statement. "The magnitude of this settlement reflects both the seriousness of the wrongdoing and the commission's resolve to hold accountable those who defraud mutual-fund shareholders."
The charges against Calugar state that from 2001 to 2003 he made $175 million in profits through improper late trading and market timing. The trades came at the expense of investors in mutual funds managed by Alliance Capital Management and Massachusetts Financial Services.