Prudential Securities Named in Marketing Timing Complaint

Massachusetts Secretary of State William F. Galvin has charged Prudential Securities with late trading of mutual funds, a practice employed by some in the industry to bolster wealthy hedge fund customers.

The practice has put the mutual fund industry under the microscope in recent months as regulators crack down on tricks used to help the wealthy and the mutual fund companies at the expense of the small investor. According to the complaint, Galvin alleges that brokers in Prudential's Boston office allowed more than 1,100 late trading transactions in the past 2 1/2 years with a total value of more than $162 million.

Galvin charged five former Prudential brokers with fraud last month in a related mutual fund market timing and late trading conspiracy, the Associated Press reported.

"This is yet another example of Wall Street putting the interests of favored clients ahead of retail investors," Galvin said of the charges he brought Thursday. "It's a dismaying but by now a familiar pattern."

The Wall Street Journal reported last week that the Commonwealth's complaint alleges that top Prudential officials knew of the market timing practice and did nothing to stop it.

The Journal reported that Michael Rice, the former president of the private-client division, is alleged to have known that a top-producing group of brokers was using market timing tricks to help clients beat the system at non-Prudential mutual funds.

A Prudential spokesman told the AP that while he had not yet seen the complaint, his company is cooperating with ongoing investigations.

You may like these other stories...

Read more articles by Sally Glick here.Most CPA firms, of any size, focus on building their brand—having a strong reputation—in their target markets. The larger the firm, the more resources it has to deploy, from...
Mark Feinsot combines a former career as a pilot and current work as a CPA to offer accounting and tax services to the aviation industry. That work as a specialist puts him on the cutting edge of a growing trend in...
There is a huge competition in the accounting field to get more clients. Large firms have in-house marketing and PR teams to take care of business development. Small firms, however, need to be strategic in their marketing...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.