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Univ. of Toledo College of Law

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Friday, October 31, 2008

Lazard Capital Markets Settles SEC Charges Involving Gifts to Fidelity

The SEC settled charges that Lazard Capital Markets LLC failed to supervise three employees who collectively spent more than $600,000 while improperly entertaining traders at Fidelity Investments in an effort to generate brokerage business. The SEC also charged the three employees and a supervisor for their roles in securities laws violations by Fidelity traders.  Earlier this year, the SEC charged Fidelity and current and former executives and employees for improperly accepting lavish gifts provided by brokers. Among those charged were former Fidelity equity trader Thomas H. Bruderman.

The Commission’s orders issued today found that former head of Lazard Capital Markets’ U.S. sales and trading department David L. Tashjian and former registered representatives Robert A. Ward and W. Daniel Williams facilitated Bruderman’s violations of the securities laws by taking him on trips to such destinations as Europe, the Bahamas, the Caribbean, Florida, and Napa Valley, Calif., often by private plane, and paying for his meals and lodging at high-end restaurants and hotels. According to the orders, Bruderman also was provided with race car driving lessons, adult entertainment and expensive wine, and approximately $50,000 was contributed toward his elaborate bachelor party in Miami.

The Commission also found that Tashjian and Louis Gregory Rice, former head of Lazard Capital Markets’ U.S. equity sales and trading desk, failed to supervise Ward and Williams during their misconduct.

The Commission’s order against Lazard Capital Markets found that the firm failed to supervise Tashjian, Ward, and Williams and detect or prevent their aiding and abetting violations of Section 17(e)(1) of the Investment Company Act. Lazard Capital Markets consented to the order without admitting or denying the findings, agreeing to be censured and pay disgorgement of $1,817,629 plus prejudgment interest of $429,379.04, and a penalty of $600,000.

Tashjian, Rice, Ward, and Williams also settled the SEC’s charges without admitting or denying the allegations. Tashjian, Ward, and Williams were ordered to cease from committing or causing any further violations will pay penalties of $75,000, $50,000 and $25,000, respectively, and will be suspended from associating with a broker, dealer or investment company for nine months, six months and three months, respectively.

For his supervisory lapses, Rice was ordered to pay a $60,000 penalty and be suspended for a period of six months from associating in a supervisory capacity with any broker or dealer.

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