Broker/Dealer Executive Agrees to SEC Settlement Resolving Late-Trading Charges

©2006 Investment Company Institute. All rights reserved. Information may be abridged and therefore incomplete. Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice. [20236] August 2, 2006 TO: BROKER/DEALER ADVISORY COMMITTEE No. 27-06 BROKER/DEALER ASSOCIATE MEMBERS No. 3-06 SEC RULES MEMBERS No. 66-06 RE: BROKER/DEALER EXECUTIVE AGREES TO SEC SETTLEMENT RESOLVING LATE-TRADING CHARGES The Securities and Exchange Commission has issued an order instituting administrative and cease-and-desist proceedings, making findings, and imposing sanctions against a former senior vice president in charge of mutual fund trading at a registered broker/dealer (the “Respondent”).1 The Order is based upon allegations that the Respondent executed after-hours trades in mutual funds for his own benefit by deliberately misusing a computerized trade-processing system. The Respondent neither admitted nor denied the accusations. The Order alleges that, as a result of the conduct described above, the Respondent willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and aided and abetted and caused violations of Rule 22c-1(a) under the Investment Company Act by his employer. Under the Order, the Respondent is barred from the brokerage and mutual fund businesses for at least three years. He was also required to pay $528,020 in disgorgement and a $100,000 civil penalty. Mara Shreck Assistant Counsel 1 See In the Matter of Robert P. Hetzer, SEC Release Nos. 34-54219 and IC-27428, Admin. Proc. File No. 3-12382 (July 26, 2006) (the “Order”). The Order is available at http://www.sec.gov/litigation/admin/2006/34-54219.pdf.