Fiserv Settles SEC Charges On MarketTiming
BROOKFIELD, Wis. - (04/22/05) -- The Securities and ExchangeCommission said Thursday it charged a former brokerage unit ofFiserv with an elaborate mutual fund trading scheme and agreed tosettle the charges for $15 million in fines and repayment ofprofits. The SEC said Fiserv Securities, which was sold last monthto Fidelity Investments, and two of its traders engaged in anillegal market-timing scheme on behalf of the firm's hedge fundcustomers. With market timing investors buy or sell shares justbefore they execute large trades for their institutional customers,based on knowledge on how a particular trade will move a stock. Thetwo traders, Thomas Gerbasio and Raymond Braun, Jr., allegedlydefrauded hundreds of mutual funds and their shareholders by usingsophisticated methods to circumvent SEC rules on market timing. Themethods included misrepresenting the nature of the trades to thefunds, opening dozens of accounts on behalf of their customers toconceal their identity from the funds, entering trades in amountsthat would avoid detection, and advising their customers onstrategies to conceal the market timing from funds that objected tothe scheme. Separately, Fiserv reported another strong financialperformance for its first quarter Thursday, with a 42% rise in netincome to $139 million, and a 7% increase in revenues to $973million.