SEC dings Peter Lynch over gifts from brokers

Posted by: Aaron Pressman on March 5, 2008

Fidelity Investments has suffered three years of embarrassing revelations of bachelor parties gone wrong (the dwarf denied being tossed, if you recall) and free Super Bowl tickets in a federal investigation of gift giving by Wall Street brokers eager for the fund giant’s stock commissions. The firm has already thrown out some of the employees involved and paid back $42 million to its fund shareholders. Today should mark the final chapter as Fidelity settled with the SEC, agreeing to pay another $8 million while sticking to the usual neither admit nor deny wrongdoing formulation common in these type of matters.

If that were it, the firm might be glad to see this final press release on the matter out of the SEC. But instead comes a new and unsettling allegation. Turns out Peter Lynch, while he was running the Magellan Fund and later when he was a fund trustee, was asking his traders to get him tickets from Wall Street, a clear violation of Fidelity’s own ethics policy. Lynch got tickets to everything from the Ryder Cup golf tournament (14 three-day passes!) to sold-out concerts by U2 and Santana. It’s depressing that the face of the firm and one of the all-time great fund managers would have been blind to the ethical — and shareholder damaging — implications of his actions.

Lynch agreed to pay back almost $16,000 but again, admitted nothing.

Reader Comments

Midwest

March 7, 2008 2:12 PM

Please, Peter, admit what you were doing. You were using your influence and power to essentially steal a little something for yourself. Where is the outrage when those most able to pay for something continue to demand some kind of special status in this world because they're wealthy? No wonder the Republicans lost me as a card carrying member last year. They fostered this type of thinking and managed to quash any kind of dissent against the thought that successful people are really owed something more (like lower taxes, tax loopholes, the right to offshore jobs...)

gym-bob

March 9, 2008 2:46 PM

His performance as a money manager is beyond reproach. His ethics less so.Just one more stain on the business of money management.In the end most investors would tolerate the sense of entitlement that goes with super sized ego for outsized returns.Its about avarice and being above the rules that govern common folk.And while Lynch played money manager with his hand out lets not forget the eager boys on the street ready to fill it with whatever it took to punch a trade ticket. Many would trade their mom let alone Santana tickets for the ones marked "You BOT" or "You Sel". It is shere folly to search for "ethics" in the money game.As if the ridiculous commissions/fees and salaries and bonuses and....aren't enough.Why do we Americans tolerate "entitlement" from the successful but not so much from the less well off?

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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