Nine from Fidelity settle SEC charges

Probe centered on improper trips, gifts

Nine current and former Fidelity Investments traders reached preliminary agreements to settle charges brought by the Securities and Exchange Commission that they improperly accepted private jet trips and other gifts, according to administrative filings and an attorney in the case.

If approved, the settlements would leave only one Fidelity trader still facing charges in what has been a long-running distraction for the Boston mutual fund giant.

The traders were among 13 current and former Fidelity employees who the SEC claimed in March improperly accepted more than $1.6 million worth of lavish gifts, travel, and entertainment from outside brokers seeking the firm's business from 2002 to 2004. Fidelity itself agreed to pay $8 million to settle the government's probe of its actions, though it did not admit or deny wrongdoing.

Of the 13, three had previously agreed to settle, including Fidelity's onetime star fund manager Peter Lynch, who allegedly received nearly $16,000 of free tickets to a golf tournament and other events.

Some of the others previously had denied wrongdoing, including David K. Donovan. Yesterday an attorney for Donovan, Raipher Pellegrino, said he had reached a preliminary settlement of the agency's allegations that he improperly accepted gifts worth $270,000, mainly private jet trips to the Super Bowl, Las Vegas, and other vacations. A separate case claiming Donovan allegedly leaked information about Fidelity trades remains pending, Pellegrino said.

In addition, administrative filings released yesterday, dated Sept. 4 to Oct. 6, show eight more individuals have settlements in principle with SEC staff, though terms are not spelled out, such as whether any admit or deny wrongdoing or will pay fines. David Bergers, head of the SEC's Boston office, declined to comment.

In addition to Donovan, individuals with settlement agreements include Scott E. DeSano, who once supervised trading operations and allegedly received gifts worth $145,000; and traders including Timothy J. Burnieika, Edward S. Driscoll, Christopher J. Horan, Steven P. Pascucci, Kirk C. Smith, Robert L. Burns, and Jeffrey D. Harris, according to the administrative law documents.

An attorney for DeSano declined to comment. Attorneys for the others did not return messages yesterday.

The documents do not show a settlement between the SEC and former trader Thomas H. Bruderman, one of the highest-profile figures in the matter. A wild bachelor party for Bruderman in Miami in March 2003 became a symbol of the investigation, described by the SEC as including adult entertainment and dwarf-tossing, and the settlements could increase the legal pressure on him. An attorney for Bruderman did not return messages.

Fidelity spokeswoman Anne Crowley said of the defendants recently settling, only one, Horan, remains employed by the company and is no longer on its trading desk. Most had already left and three more left Fidelity on Sept. 30, Burnieika, Pascucci, and Smith, the spokeswoman said. Bruderman left the company in 2004.

Ross Kerber can be reached at kerber@globe.com.