|March 10, 2008|
|Sex, Drugs and Rock & Roll (And a Visit with Coach Parcells) at the SEC as Watchdog Takes Aim at Ex-Fidelity Traders|
|By Kevin McCauley|
|The Securities and Exchange Commission is normally an insomniac’s best friend. Anyone desperate for a little shut-eye, just needs to open one of the hundreds of financial documents issued each year by the SEC. Blissful slumber beckons.|
The SEC heated things up with yesterday's release of a racy 31-page administrative proceeding report (click for PDF) aimed at former Fidelity Investment traders from the SEC’s Enforcement Division. It makes Rupert Murdoch's gang at the New York Post turn green with envy.
The report features allegations that brokers doing business with Fidelity wowed its traders with $1.5M (from Jan. 02 through Oct. `04) worth of prostitutes, endless golf trips, private jets, Concorde flights, cases of wine, illegal drugs, sports tickets (Boston Red Sox/Celtics/Patriots and a trip to Dallas to visit then Cowboys coach Bill Parcells, French Open, Wimbledon, U.S. Open, Super Bowl) and concert ducats (Van Morrison, Bruce Springsteen, Rolling Stones, Bare Naked Ladies.) Overall, there were 900 tickets for some of the best seats at 270 events.
The SEC ran an Enquirer-like feature on the bachelor party of Thomas Bruderman, who traded healthcare and pharmaceutical stocks for Fidelity until he resigned in Dec. `04.
“Bruderman received more than $450,000 worth of travel, entertainment and gifts from brokers during the Relevant Period. One example was his bachelor party in Miami, Florida in March 2003. Bruderman solicited certain brokers to arrange and pay for the event, and the brokers complied—at a total cost of approimately $160,000. The festivities included private jet travel, luxury accommodations at the Delano Hotel, a chartered yacht, golf, a limousine and other entertainment such as expensive dinners and strip clubs. Brokers hired two women to entertain the attendees at the party and provided a big filled with illegal drugs (ecstasy pills to Bruderman).” Those women were believed to be prostitutes, according to the SEC.
In addition to the bachelor party, brokers paid all or part of Bruderman’s approximately 25 trips. They also paid for gifts such as a more than $5,000 fee for a racing school, thousands of dollars worth of wine, and a humidor with cigars ($1,300).
The SEC regales readers with an a email from Bruderman that pariodied the Bud Light beer commercial.
“Here’s to you, Mr. Institutional Sales Trader. Because you spend all day lying to people with MBA’s from Ivy League Schools even through you failed Econ 101 at the Community College. And if the stock goes up or down, you don’t care as long as you get your nickel. Five cents a share. So crack open an ice cold Bud Light, you overpaid sack of sh*t, because without you there would be a lot of buy side guys sitting in bad seats at the concert.”
There is much more grist in the SEC document beyond Bruderman, one of 13 charged, including tales of illegal gambling and an explanation of the “Spotted Owl,” a Fidelity staffer who went on so many golf junkets that he earned the nickname of the bird that is rarely seen.
Fidelity wants everybody to know those "Master of the Universe" days are far behind it. It agreed to pay an $8M fine to settle the SEC probe, and “neither admits nor denies the SEC order.”
Fidelity customers hope the Spotted Owl has been grounded.
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