Ex-MFS VP found liable in bonds case
WASHINGTON - A former manager of fixed-income mutual funds for Massachusetts Financial Services Co. was found liable for insider trading of 30-year Treasury bonds, federal securities regulators said yesterday.
Steven Nothern, former MFS senior vice president, was accused of generating $3.1 million in illegal profits after finding out on Oct. 31, 2001, that the Treasury Department had decided to stop issuing the long bond, the Securities and Exchange Commission said.
According to the SEC, Nothern obtained the market-sensitive information from a Washington consultant, Peter Davis, who was allowed to attend the Treasury Department’s quarterly refunding news conferences on the condition that he honor the news embargo imposed by the government until the designated public announcement time.
On Oct. 31, 2001, the news conference ended at about 9:25 a.m., and Davis allegedly placed a series of cellphone calls to his clients, including Nothern, the SEC said.
Nothern and other MFS portfolio managers whom he tipped bought $65 million in par value of 30-year bonds before the public announcement, according to the SEC lawsuit.
The jury in Boston hearing the civil case returned a verdict that Nothern violated federal securities law.
The SEC wants the court to require Nothern to turn over his illegal profits and to impose a civil penalty. 