The U.S. Financial Industry Regulatory Authority today announced that Oppenheimer & Co. will pay a fine of US$250,000 for supervisory and other failures in connection with improper market timing of mutual fund shares. The firm will also pay US$4.25 million in restitution to more than 60 mutual fund companies.
FINRA found that Oppenheimer failed to prevent a group of five traders’ improper, short-term trading of mutual funds on behalf of hedge fund customers – activity that yielded about US$9 million in gross revenue for the firm. Oppenheimer also failed to establish, maintain or enforce supervisory systems and written procedures to detect and prevent improper market timing activities, or to maintain required books and records of the short-term trading of mutual funds through other firms’ trading platforms.
Oppenheimer settled this action without admitting or denying the charges, but consented to the entry of FINRA’s findings.
All five traders involved in the improper market timing have been barred from the securities industry for failure to cooperate with the regulatory investigation of the misconduct at Oppenheimer. One trader has appealed the bar to the Securities and Exchange Commission.
“Market timing harms long-term fund investors who ultimately bear the brunt of higher costs long after market timers have moved on to the next quick trade,” said Susan Merrill, FINRA executive vice president and chief of enforcement. “Oppenheimer’s lack of appropriate supervisory systems and controls led to the firm’s failure to heed hundreds of warnings and requests it received from mutual funds and life insurance companies for the firm’s brokers to cease this trading for hedge funds.”
Oppenheimer to pay US$4.5 million to settle FINRA market timing charges
Improper trades made on behalf of hedge fund client
- By: James Langton
- February 21, 2008 February 21, 2008
- 11:10