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Friday, December 17, 2004

Fido Fires Traders

by: Sean Hanna, Editor in Chief

Heads are starting to roll at Fidelity. Yesterday, the Boston Behemoth disciplined 16 of its 60 equity traders. Two of those traders left Fidelity. One of them even turned out to have personal ties connections to another well-known figure at the center of a recent business scandal. Meanwhile, word is that the scandal did not touch trading chief Scott DeSano.

Where to start? Kozlowski, that's it. True to the tabloid tradition the Boston Herald leads with the gossip about the family of the now infamous former Tyco CEO L. Dennis Kozlowski. The New York Times, also obviously, ends with those details. But first, the bigger picture.

Two Fidelity equity traders were either pressured out (the Boston Globe ), passively "left" (the New York Times and Wall Street Journal ) or were fired (the New York Post , of course). The Times is the only paper to turn to the NASD database as a resource and reports that the NASD records show the two traders -- Robert L. Burns and Thomas H. Bruderman -- were terminated on Tuesday. Fidelity itself would not comment on the pair, other than to confirm that they were no longer employed there.

Fidelity added that it disciplined another 14 equity traders with fines and warnings. Some of those fines were small and some were "very substantial," a Fidelity spokesperson told the Gray Lady. The Journal adds that the disciplinary steps are a response to an internal Fidelity investigation. The Times adds that the investigation may be looking into the behavior of as many as 50 of the 60 Fidelity equity traders.

Fortunately for the tabloids, one of the two now absent traders was the son-in-law of Koslowski. That trader would be Thomas Bruderman, the 36-year-old husband of Sandra Kozlowski. The Globe adds the detail that Bruderman and Kozlowski were married "days" before the trial of Dennis Kozlowski started. The Herald describes the wedding as a "lavish two-day affair at the Kozlowski mansion on Nantucket."

For those who missed it, the elder Kozlowski's trial for tax evasion and embezzlement of Tyco funds ended in a mistrial. He had been accused of using Tyco for personal expenses (jetting to Italy for his wife's Tyco-paid-for birthday party, for example). Meanwhile, the Times claims to have talked with an unnamed source who got a peek at the expense reports of Kevin Quinn, the Jefferies & Company ex-employee at the center of the scandal. Those sheets reportedly show Bruderman and Burns as frequent recipients of Quinn's largess and travel gifts. Perhaps Sandra did not look far from her father's tree when searching for a husband.

Meanwhile, the Journal is the only paper to follow up with the Scott DeSano angle. It reports that "it wasn't known" whether DeSano received any discipline, but that a Fidelity spokesperson confirmed that DeSano "remains as head of equity trading today and in the future." So it sounds like he is on safe ground.

The Journal also takes a jab at the New York Times and Boston Globe (they two papers share the same ownership) by pointing out that Fidelity's press statement appears to address allegations in the Globe that a Fidelity trader may have favored his brother. Fidelity said it found no instances in which those relationships harmed its fund investors.

Fidelity also said that it found no instances in which the gifts affected the quality of executions by the Fidelity funds on their trades (no harm, no foul?) and that it "takes this matter very seriously."

Oh yes, the Herald also takes a stab at branding the scandal, calling it "claret-for-commissions." We like our "green-for-greens" tag better. Let us know.  

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