Memo #
7451
FORMER PORTFOLIO MANAGER ENJOINED AND BARRED WITH RESPECT TO PERSONAL TRADING ACTIVITIES
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1 Investment Company Act Release No. 21541 (November 27, 1995) (order); Litigation Release No. 14737 (November 28, 1995).
November 30, 1995
TO: COMPLIANCE COMMITTEE No. 45-95
INVESTMENT ADVISER MEMBERS No. 55-95
UNIT INVESTMENT TRUST MEMBERS No. 63-95
RE: FORMER PORTFOLIO MANAGER ENJOINED AND BARRED WITH RESPECT
TO PERSONAL TRADING ACTIVITIES
______________________________________________________________________________
The Securities and Exchange Commission recently announced that a former portfolio
manager to registered investment companies was enjoined and barred as a result of certain of
his personal trades. The Commissions litigation release with respect to the injunctive action
and the Commissions order in the administrative proceeding are attached.1
In February 1995 the Commission filed a complaint alleging that the former portfolio
manager had concealed from the mutual funds and from his employer that he was directing
compensation from the funds investments to his son and failed to disclose that he was a
founder, director, and shareholder of the parent company of an issuer in which he had caused
his funds to invest. The Commissions complaint also alleged that he had failed to report
certain personal securities transactions to his employer.
In September, the portfolio manager, without admitting or denying the allegations of
the Commissions complaint, consented to a permanent injunction from violating the antifraud
and certain other provisions of the securities laws and consented to a civil penalty of $115,000.
The litigation release states, "No disgorgement was sought . . . because [the former portfolio
manager] did not personally profit from the transactions."
In the Commissions administrative proceeding, the portfolio manager consented,
without admitting or denying the allegations, to a bar from associating with any investment
adviser, investment company, broker-dealer or municipal securities dealer, with a right to
reapply for association after five years.
Thomas M. Selman
Associate Counsel
Attachment
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of the attachment referred to in this memo, please call the Institute’s Information Resource
Center at (202)326-8305 or (202)326-5903, and ask for this memo’s attachment number: 7451.