Tuesday, September 29, 2009
The SEC found that Thomas C. Bridge, a salesperson formerly associated with broker-dealer A.G. Edwards & Sons, Inc., violated antifraud provisions in connection with trading in mutual funds on behalf of a client who engaged in market timing. The Commission found that Bridge "took various actions - such as establishing multiple accounts with different customer names and numbers, transferring assets between accounts, transferring accounts between branch offices, and linking activity in the accounts to other [salespersons] through the use of "split" [salesperson identification] numbers - in an effort to mislead mutual fund companies as to the identity of their market-timing clients." The Commission concluded that Bridge "deceived the funds into permitting trades that conflicted with fund restrictions" and thereby "employed a scheme to defraud and engaged in a practice that operated as a fraud upon the mutual fund companies."
The Commission also found that James D. Edge, former branch manager of A.G. Edwards' Boca Raton and Lake Worth offices and Bridge's direct supervisor, and Jeffrey K. Robles, former branch manager of A.G. Edwards' Boston (Back Bay) office and Sacco's direct supervisor, failed to exercise that supervision reasonably. The Commission noted that Edge "was fully aware of, and complicit in, the tactics Bridge used to continue trading in mutual funds that had placed restrictions on Bridge's trading." It also determined that Robles "knew Sacco's trading was aberrant and that Sacco was receiving correspondence from mutual fund companies placing restrictions on his trading." The Commission therefore concluded that "Robles' failure to respond adequately to indications that Sacco was engaging in questionable activity was at least unreasonable under the circumstances."
For these violations, Bridge was barred from association with any broker or dealer with a right to reapply after five years and ordered to cease and desist from committing future violations of the antifraud provisions, to pay disgorgement plus prejudgment interest, and to pay a civil money penalty. Edge and Robles were barred from association with any broker or dealer in a supervisory capacity with a right to reapply after five and three years, respectively, and were both assessed a civil money penalty.