Magazine article American Banker

Fleet Settles SEC Charges against a Firm It Bought

Magazine article American Banker

Fleet Settles SEC Charges against a Firm It Bought

Article excerpt

Fleet Investment Advisors Inc., the registered investment adviser of Fleet Financial Group, agreed Thursday to pay $1.9 million to settle charges of fraud by a predecessor firm.

The Securities and Exchange Commission said Shawmut Investment Advisers Inc. and eight individuals, including Michael J. Rothmeier, its former president, failed to disclose it used $1.8 million of its advisory clients' brokerage commissions to pay for client referrals. In addition, the SEC said Shawmut cost clients more than $63,000 by failing to seek the best execution of trades, a standard that includes factors such as best price.

Fleet, which bought Shawmut National Corp. of Hartford, Conn., in December 1995, is liable as Shawmut's successor, the SEC said.

"This sends a very strong message. Complete and full disclosure of brokerage practices is required under the federal securities laws," said Juan Marcel Marcelino, the district administrator of the SEC's Boston office.

However, Fleet played no part in the alleged fraud and is only being required to provide restitution to former Shawmut clients, he added.

The $106.9 billion-asset banking company said it has already repaid $1.7 million and will pay an additional $200,000. The Boston-based company, which voluntarily disclosed the alleged abuses to the SEC, neither admitted nor denied liability.

The SEC said that beginning in mid-1993 Mr. Rothmeier and other Shawmut officers directed clients' trades to brokers who referred new client accounts to Shawmut. …

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