Press Release: SEC Charges A.G. Edwards With Failing to Supervise Brokers Who Engaged in Illegal Market Timing
summary
A.G. Edwards & Sons agreed to pay $3.86 million to settle SEC charges that it failed to supervise brokers who used deceptive practices to conduct illegal market timing between 2001 and 2003, while two brokers and two branch managers were separately charged with misconduct.
paragraph
A.G. Edwards & Sons settled SEC charges by paying $3.86 million, including $2.36 million in disgorgement and prejudgment interest and $1.5 million in civil penalties. The SEC found the firm failed to implement reasonable policies or systems to detect or prevent illegal market timing by its brokers between January 2001 and September 2003, allowing deceptive trades that circumvented mutual fund restrictions. In addition to the financial penalty, A.G. Edwards was censured and agreed to hire an independent consultant to review its supervisory procedures, while two brokers and two branch managers faced separate enforcement actions.
narrative
Between January 2001 and September 2003, registered representatives at multiple A.G. Edwards branch offices engaged in illegal market timing by using deceptive practices to circumvent mutual fund restrictions on rapid trading. The SEC found that A.G. Edwards failed to develop or implement reasonable supervisory policies, procedures, or systems to monitor these activities or respond to red flags indicating misconduct. As part of a settlement, A.G. Edwards agreed to pay $3.86 million—$2.36 million in disgorgement and prejudgment interest and $1.5 million in civil penalties—and accepted a formal censure. The firm also committed to hiring an independent consultant to evaluate whether its revised policies were reasonably designed to prevent future market timing violations. Separately, the SEC brought charges against two brokers and two branch managers for their direct involvement in the fraudulent schemes. A.G. Edwards consented to the SEC’s order without admitting or denying the allegations, acknowledging its supervisory failures. The case underscored the firm’s systemic neglect of its duty to oversee its registered representatives and protect investors from abusive trading practices.
Classified broker-dealer-fraud(confidence 95%). EDGAR detection: forms Form D· recall 29% / precision 9%. detection rule →
Parties
fraudulent market timing schemefraudulent market timing schemessec's order without admitting or denying findingsSecurities and Exchange Commission
Keywords
market timingedwardsmarkettimingregisteredsecengaged illegalillegal marketregistered representativespolicies proceduresregional directorchicago regionalregionaledwards failingfailing supervise
Exhibits & Attached Documents (4)
Extracted insights
Dollar amounts 4
- $3.86M $3.86 Million $1M–$10M
- $3.86M $3.86 million $1M–$10M
- $2.36M $2.36 million $1M–$10M
- $1.50M $1.5 million $1M–$10M
Entities 4
- person fraudulent market timing scheme
- person fraudulent market timing schemes
- agency sec's order without admitting or denying findings
- agency Securities and Exchange Commission
Triples 13
- SEC charges A.G. Edwards With Failing to Supervise Brokers Who Engaged in Illegal Market Timing
- A.G. Edwards agrees to pay $3.86 Million to Settle Charges
- A.G. Edwards failed to supervise Registered Representatives Who Used Deceptive Means to Place Market Timing Trades
- A.G. Edwards will pay $2.36 Million Disgorgement and Prejudgment Interest
- A.G. Edwards will pay $1.5 Million Civil Penalties
- A.G. Edwards agreed to hire Independent Consultant to Review Policies and Procedures
- Registered Representatives in A.G. Edwards' Boston Back Bay Branch engaged in Fraudulent Market Timing Scheme
- Registered Representative in A.G. Edwards' Boca Raton Branch engaged in Fraudulent Market Timing Schemes
- Two Branch Managers in A.G. Edwards involved in Fraudulent Market Timing Schemes
- Registered Representatives in A.G. Edwards' Branch Offices engaged in Illegal Market Timing Schemes Between January 2001 and September 2003
- A.G. Edwards failed to develop Reasonable Policies and Procedures to Monitor Market Timing
- A.G. Edwards failed to develop Reasonable Policies and Procedures for Monitoring Red Flags About Deceptive Market Timing
- A.G. Edwards consented to SEC's Order Without Admitting or Denying Findings
PDF (from attached: pdf)
Text layers
Extracted body text (3,411c)
SEC Charges A.G. Edwards With Failing to Supervise Brokers Who Engaged in Illegal Market Timing A.G. Edwards Agrees to Pay $3.86 Million to Settle Charges; SEC Also Charges Two Brokers And Two Branch Managers With Misconduct FOR IMMEDIATE RELEASE 2007-84 Washington, D.C., May 2, 2007 - The Securities and Exchange Commission today announced settled enforcement proceedings against A.G. Edwards & Sons, Inc., alleging that A.G. Edwards failed reasonably to supervise some of its registered representatives who used deceptive means to place market timing trades on behalf of their customers. As part of its settlement with the SEC, A.G. Edwards, a registered broker-dealer headquartered in St. Louis, Mo., will pay disgorgement and prejudgment interest of $2.36 million and civil penalties of $1.5 million for a total payment of $3.86 million. A.G. Edwards also agreed to certain undertakings, including hiring an independent consultant to review whether the changes A.G. Edwards has made to its policies and procedures are reasonably designed to prevent and detect future market timing activity. The SEC also announced the institution of settled enforcement proceedings against a former registered representative in A.G. Edwards' Boston Back Bay, Mass., branch office for engaging in a fraudulent market timing scheme and the institution of administrative and cease-and-desist proceedings against a registered representative in A.G. Edwards' Boca Raton, Fla., branch office and two branch managers for their alleged involvement in the fraudulent market timing schemes. The SEC's Order relating to A.G. Edwards finds that between January 2001 and September 2003, registered representatives in several of A.G. Edwards' branch offices engaged in illegal market timing schemes on behalf of their customers. These registered representatives engaged in deceptive practices designed to circumvent restrictions that mutual funds imposed on market timing. A.G. Edwards failed to develop or adopt reasonable policies, procedures or systems to monitor market timing in order to prevent and detect its registered representatives' misconduct. A.G. Edwards also failed to develop or adopt reasonable policies, procedures or systems for monitoring and responding to red flags about its registered representatives' deceptive market timing on behalf of customers. Merri Jo Gillette, Regional Director of the SEC's Chicago Regional Office, said, "By failing to develop or adopt reasonable policies to prevent its registered representatives' misconduct, A.G. Edwards ignored its responsibility to reasonably supervise its registered representatives." In addition to the $3.86 million payment, A.G. Edwards has agreed to be censured and to hire an independent consultant to review its policies and procedures related to market timing. A.G. Edwards has consented to the issuance of the SEC's Order without admitting or denying the findings contained therein. # # # For further information contact: Merri Jo Gillette (312) 353-9338 Regional Director, Chicago Regional Office Robert J. Burson (312) 353-7428 Senior Associate Regional Director, Chicago Regional Office Paul A. Montoya (312) 353-7429 Assistant Regional Director, Chicago Regional Office Additional materials: Administrative Proceeding Nos. 34-55692, 33-8798 and Order, and 33-8795 http://www.sec.gov/news/press/2007/2007-84.htm Home | Previous Page Modified: 05/02/2007
OCR text (3,411c · plain-text · 99% conf)
SEC Charges A.G. Edwards With Failing to Supervise Brokers Who Engaged in Illegal Market Timing A.G. Edwards Agrees to Pay $3.86 Million to Settle Charges; SEC Also Charges Two Brokers And Two Branch Managers With Misconduct FOR IMMEDIATE RELEASE 2007-84 Washington, D.C., May 2, 2007 - The Securities and Exchange Commission today announced settled enforcement proceedings against A.G. Edwards & Sons, Inc., alleging that A.G. Edwards failed reasonably to supervise some of its registered representatives who used deceptive means to place market timing trades on behalf of their customers. As part of its settlement with the SEC, A.G. Edwards, a registered broker-dealer headquartered in St. Louis, Mo., will pay disgorgement and prejudgment interest of $2.36 million and civil penalties of $1.5 million for a total payment of $3.86 million. A.G. Edwards also agreed to certain undertakings, including hiring an independent consultant to review whether the changes A.G. Edwards has made to its policies and procedures are reasonably designed to prevent and detect future market timing activity. The SEC also announced the institution of settled enforcement proceedings against a former registered representative in A.G. Edwards' Boston Back Bay, Mass., branch office for engaging in a fraudulent market timing scheme and the institution of administrative and cease-and-desist proceedings against a registered representative in A.G. Edwards' Boca Raton, Fla., branch office and two branch managers for their alleged involvement in the fraudulent market timing schemes. The SEC's Order relating to A.G. Edwards finds that between January 2001 and September 2003, registered representatives in several of A.G. Edwards' branch offices engaged in illegal market timing schemes on behalf of their customers. These registered representatives engaged in deceptive practices designed to circumvent restrictions that mutual funds imposed on market timing. A.G. Edwards failed to develop or adopt reasonable policies, procedures or systems to monitor market timing in order to prevent and detect its registered representatives' misconduct. A.G. Edwards also failed to develop or adopt reasonable policies, procedures or systems for monitoring and responding to red flags about its registered representatives' deceptive market timing on behalf of customers. Merri Jo Gillette, Regional Director of the SEC's Chicago Regional Office, said, "By failing to develop or adopt reasonable policies to prevent its registered representatives' misconduct, A.G. Edwards ignored its responsibility to reasonably supervise its registered representatives." In addition to the $3.86 million payment, A.G. Edwards has agreed to be censured and to hire an independent consultant to review its policies and procedures related to market timing. A.G. Edwards has consented to the issuance of the SEC's Order without admitting or denying the findings contained therein. # # # For further information contact: Merri Jo Gillette (312) 353-9338 Regional Director, Chicago Regional Office Robert J. Burson (312) 353-7428 Senior Associate Regional Director, Chicago Regional Office Paul A. Montoya (312) 353-7429 Assistant Regional Director, Chicago Regional Office Additional materials: Administrative Proceeding Nos. 34-55692, 33-8798 and Order, and 33-8795 http://www.sec.gov/news/press/2007/2007-84.htm Home | Previous Page Modified: 05/02/2007