Oppenheimer Settles Market-Timing Case

Feb 21 2008 | 1:17pm ET

Oppenheimer & Co. has agreed to pay $4.5 million to settle mutual-fund market-timing charges, the Financial Industry Regulatory Authority said today.

FINRA alleged that Oppenheimer failed to adequately supervise five traders who made thousands of improper trades on behalf of hedge-fund clients. According to the complaint, the traders set up some 580 accounts for 15 hedge funds in an effort to circumvent trading blocks put in place by mutual funds to stop market-timing, as well as to conceal their identity.

The trades, which took place in 2003, netted Oppenheimer some $9 million in profits.

“Oppenheimer’s lack of appropriate supervisory systems and controls led to the firm’s failure to heed hundreds of warning and requests it received from mutual funds and life insurance companies for the firm’s brokers to cease this trading for hedge funds,” Susan Merrill, FINRA’s enforcement chief, said.

Oppenheimer agreed to pay $4.25 million in restitution and a $250,000 without admitting wrongdoing. The five brokers have been barred from the securities industry for failure to cooperate with FINRA’s probe, although one has applied to the Securities and Exchange Commission to get the ban lifted.


In Depth

Dillon Eustace: The Advantages of ICAVs

Feb 11 2016 | 7:51pm ET

As the growth of alternative investment vehicles continues, global asset managers...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedging Against Reputational Risk in the 21st Century

Feb 12 2016 | 7:18pm ET

For investors, the first step in researching a new fund or manager is to google...