The Securities and Exchange Commission has settled its action against Edward Gobora, former global head of foreign exchange trading and portfolio manager at Merrill Lynch Investment Mangers LP.

Without admitting or denying the allegations, Gobora consented to a final judgment which permanently prohibits him from violating the anti-fraud provisions of the federal securities laws and from the reporting and record-keeping provisions relating to investment advisers and investment companies.

Gobora will pay a civil penalty of $75,000, and is banned from associating with any investment adviser for at least five years.

The commission’s complaint alleges that from 1997 through April 2001, Gobora defrauded Merrill Lynch clients in two ways. The first scheme involved “cherry picking” short term foreign exchange trades, with profitable trades allocated by Gobora to favored clients, and losing trades given to disfavored clients. The second scheme involved delaying the execution and allocation of foreign exchange trades that were prompted by client trades of foreign securities.

If the market moved positively after a position was opened, Gobora allocated the trade to favored clients, with the original client trading the foreign exchange at the later, less favorable price. The Merrill Lynch clients that were hurt by these schemes included several U.S. registered investment companies, says the SEC. It is continuing its investigation of this matter as it relates to other parties.