Lazard Capital Markets to pay millions for Fido boondoggles

Broker-dealer Lazard Capital Markets LLC was charged yesterday with failing to supervise employees who spent more than $600,000 entertaining traders at mutual fund giant Fidelity Investments, the SEC said.

A previous headline misidentified Lazard Capital Markets as Lazard, a publicly traded financial advisory and asset management firm. Lazard Capital Markets is a private company that was spun off from Lazard when it went public.

Broker-dealer Lazard Capital Markets LLC was charged yesterday with failing to
supervise employees who spent more than $600,000 entertaining traders at mutual fund giant Fidelity Investments of Boston, the Securities and Exchange Commission said.
The New York-based securities firm, which agreed to the SEC’s findings without admitting or denying guilt, is to disgorge $1.8 million and interest of nearly $430,000, and pay a penalty of $600,000.
In March the SEC charged Fidelity and some of its executives and employees for improperly accepting lavish gifts provided by brokers.
Yesterday, the SEC charged that David Tashijan, the former head of Lazard Capital Markets’ U.S. sales and trading department, and former Lazard registered representatives Robert Ward and Daniel Williams facilitated violations of securities laws by former Fidelity equity trader Thomas Bruderman.
The Lazard brokers took Mr. Bruderman on trips to Europe, the Bahamas, the Caribbean, Florida and California’s Napa Valley, often by private plane, paying for his hotel stays and meals at expensive restaurants, the SEC said.
Mr. Bruderman, the son-in-law of former Tyco International Ltd. chief executive Dennis Kozlowski, was also provided with race car driving lessons, adult entertainment and expensive wine, and about $50,000 was contributed to his elaborate bachelor party in Miami, the SEC said in a release.
Mr. Tashijan and Louis Gregory Rice, former head of Lazard Capital Markets’ U.S. equity sales and trading desk, failed to supervise Mr. Ward and Mr. Williams, the SEC found.
“Mutual fund traders owe their loyalty and allegiance solely to the funds and their investors,” George Curtis, deputy director of the SEC’s division of enforcement, said in a statement.
“When registered representatives provide mutual fund traders with prohibited travel, entertainment and gifts, it may impair their objective judgment and harm investors,” he said.
Brokerage firms must implement procedures to prevent employees from illegally providing compensation for brokerage business, David Bergers, regional director of the SEC’s Boston regional office, said in the statement.
The SEC said Lazard Capital Markets provided “extraordinary cooperation” in resolving the case.
Lazard agreed to be censured.
The four former Lazard employees also settled the SEC’s charges without admitting or denying the allegations.
Mr. Tashijan, Mr. Ward and Mr. Williams were ordered to stop violating securities laws and are to pay penalties of $75,000, $50,000 and $25,000, respectively.
They are suspended from associating with a broker, dealer or mutual fund company for nine months, six months and three months, respectively.
Mr. Rice was ordered to pay a $60,000 penalty and suspended for six months.
Attorneys for Lazard Capital Markets and the former employees did not return calls for comment.