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...

Welcome to the AccountingWEB series “Marketing Today and Tomorrow” by Sally Glick, CMO, principal, Sobel & Co., LLC. You can see all of her articles here.There was a time when a marketing director...
Welcome to the AccountingWEB series "Marketing Today and Tomorrow" by Sally Glick, CMO, principal, Sobel & Co., LLC. You can see all of her articles here.Did you know that the custom of setting...
Welcome to the AccountingWEB series "Marketing Today and Tomorrow" by Sally Glick, CMO, principal, Sobel & Co., LLC. You can see all of her articles here. While your client service schedule may seem a bit...

Upcoming CPE Webinars

Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
May 1
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.