SEC discloses settlement with Fidelity employees

Eight current and former Fidelity Investments employees have reached a preliminary agreement to settle charges brought by the Securities and Exchange Commission over improper gifts, documents released by the agency show today.

The eight were among 13 current and former employees of the Boston mutual fund giant, mostly traders, who the agency claimed in March improperly accepted more than $1.6 million worth of lavish gifts 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, but it did not admit or deny wrongdoing.

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

Some of the others previously had denied wrongdoing.

The documents released today, dated from September 4 through October 6, show eight more individuals have reached settlements in principal with SEC staff, though they do not spell out the terms of the arrangements.

David Bergers, the head of the SEC's Boston office, declined to comment. The settlements seem to still require final approval from the commission itself.

Individuals now settling include Scott E. DeSano, who once supervised trading operations; Timothy J. Burnieika; Edward S. Driscoll; Christopher J. Horan; Steven P. Pascucci; Kirk C. Smith; Robert L. Burns; and Jeffrey D. Harris, the documents show.

The documents do not show settlements between the SEC and two other former Fidelity traders, however, Thomas H. Bruderman and David K. Donovan.

Attorneys for Bruderman and Donovan did not immediately return messages.

A lavish 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 the remaining defendants.

Fidelity spokeswoman Anne Crowley said of the group of eight and the two remaining defendants 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, including Burnieika, Pascucci, and Smith, the spokeswoman said.

To read a previous story about the SEC and Fidelity, please click here.
(By Ross Kerber, Globe staff)