Wednesday, 1 April 2015
Last updated 9 min ago
Jun 11 2008 | 12:44pm ET
A trio of former Merrill Lynch brokers have been barred by the New York Stock Exchange for helping a hedge fund deceptively market-time mutual funds.
Kevin Brunnock, Christopher Chung and William Savino each consented, without admitting or denying the charges, to a censure and permanent bar. The so-called “CBS Group” received more than 150 stop notices from mutual funds attempting to end the practice, but they used a variety of deceptive practices to keep it going for three years, even after their bosses ordered them to stop.
According to the NYSE, from October 2000 until October 2003—first at UBS and, after January 2002, at Merrill Lynch—the three facilitated more than 25,000 short-term mutual fund trades for hedge fund Millennium Partners, using dozens of accounts and other deceptive measures to evade mutual fund market-timing restrictions.
At UBS, “the CBS Group facilitated Millennium’s short-term trading by disguising Millennium’s trades through the use of 35 Millennium accounts, more than 20 annuity contracts, two branch codes, six different FA and FA split numbers,” NYSE said.
“Even after Merrill Lynch instructed the CBS group to cease market-timing, the CBS Group entered into a sticky asset arrangement with a fund representative which permitted the CBS Group to conduct frequent trading in the fund in exchange for the CBS Group’s placement of a long-term or sticky asset investment of $1 million.”
UBS was fined $49.5 million by the NYSE and New Jersey Bureau of Securities for failing to stop the Brunnock, Chung and Savino, while Merrill was fined $13.5 million by the NYSE. New Jersey also revoked the trio’s licenses in March 2005.
Millennium Partners was one of the first and most high-profile subjects of then-New York Attorney General Eliot Spitzer’s investigation of improper mutual fund market-timing and late-trading. The firm and its executives agreed in 2005 to pay $180 million to settle the probe.
Mar 9 2015 | 6:35am ET
As more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…
Mar 20 2015 | 12:45pm ET
StreetWise Partners, a non-profit organization that works with low-income individuals to help them overcome employment barriers, raised over $275,000 at the 2015 Raising the Ante Charity Poker Tournament and Casino Event last Wednesday evening at Capitale. Here are some photos from the event. Read more…