SEC v. Martin J. Druffner; Justin F. Ficken; Skifter Ajro; John S. Peffer; Marc J. Bilotti; and Robert Shannon, No. LR-18444, District of Massachusetts — Press Release
raw: Martin J. Druffner, et al.
Martin J. Druffner, et al., No. LR-18444
The SEC charged five former Prudential Securities brokers—Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer, and Marc J. Bilotti—and their branch manager Robert Shannon with securities fraud for evading mutual fund trading bans from 2001 to September 2003 by falsifying identities through multiple broker codes and sham accounts, resulting in thousands of illicit trades and allegations of violations under Section 17(a) of the Securities Act and Section 10(b) with Rule 10b-5.
From 2001 through September 2003, five former Prudential Securities brokers—Druffner, Ficken, Ajro, Peffer, and Bilotti—engaged in thousands of market timing trades in mutual funds after being banned, using multiple broker identification numbers and sham customer accounts to conceal their identities. Their branch manager, Robert Shannon, aided and abetted the fraud by approving these illicit trades. The SEC alleges violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act with Rule 10b-5, seeking injunctive relief, disgorgement, civil penalties, and other equitable remedies, with its investigation ongoing and supported by state and industry regulators.
From at least 2001 through September 2003, five former Prudential Securities brokers—Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer, and Marc J. Bilotti—engaged in thousands of market timing trades in mutual funds after being explicitly blocked by fund companies for such activity. To evade these restrictions, the brokers concealed their own identities or those of their customers by establishing multiple broker identification numbers and opening additional brokerage accounts under false or misrepresented customer names. Their branch manager, Robert Shannon, substantially assisted the scheme by approving these prohibited trades, thereby enabling the fraud to continue. The SEC alleges that these actions violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, along with Rule 10b-5, with Shannon aiding and abetting the violations. The fraud occurred at the firm’s Boston branch and harmed mutual fund shareholders by undermining fair trading practices and diluting returns for long-term investors. The SEC is seeking injunctive relief, disgorgement of ill-gotten gains, civil penalties, and other equitable remedies. The investigation, which received assistance from the Massachusetts Secretary of State, the NASD, and the NYSE, remains ongoing.
Extracted insights
- organization The Commission
- agency the securities and exchange commission
- The Securities and Exchange Commission announced a civil fraud action against five brokers and one branch manager formerly employed by Prudential Securities, Inc.
- The Commission alleges that former brokers Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer, and Marc J. Bilotti defrauded mutual funds and their shareholders
- Former brokers Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer, and Marc J. Bilotti defrauded mutual funds and their shareholders
The Securities and Exchange Commission today announced a civil fraud action against five brokers and one branch manager formerly employed by Prudential Securities, Inc., in connection with their market timing trades in numerous mutual funds. The Commission alleges in its complaint that, from at least 2001 through September 2003, former brokers Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer, and Marc J. Bilotti defrauded mutual funds and their shareholders by misrepresenting their identities or the identities of their customers in connection with thousands of market timing trades after the mutual funds had restricted or blocked the defendants or their customers from further trading. According to the Commission's complaint, former branch manager Robert Shannon substantially assisted the brokers in their violations by, among other things, approving their market timing trades. Until September 2003, the defendants worked at a Prudential Securities branch in Boston, Massachusetts. According to the Commission's complaint, filed in federal district court in Boston, from at least 2001 through September 2003, numerous mutual fund companies blocked the defendants or their brokerage customers from further trading in their funds after the mutual fund companies detected market timing activity by the defendants. The complaint alleges that, to evade these blocks, the defendants concealed their own identities by using multiple broker identification numbers or concealed the identities of their brokerage customers by establishing additional brokerage accounts at Prudential Securities on behalf of the customers. The Commission's complaint alleges that Druffner, Ficken, Ajro, Peffer, and Bilotti violated Section 17(a) of the Securities Act of 1933 and violated or aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The complaint alleges that Shannon aided and abetted his co-defendants' violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission is seeking injunctive relief, disgorgement, penalties, and such equitable relief as the court deems appropriate. The Commission acknowledges the assistance of the Secretary of the Commonwealth of Massachusetts, the National Association of Securities Dealers, and the New York Stock Exchange in its investigation. The Commission's investigation is continuing. SEC Complaint in this matterThe Securities and Exchange Commission today announced a civil fraud action against five brokers and one branch manager formerly employed by Prudential Securities, Inc., in connection with their market timing trades in numerous mutual funds. The Commission alleges in its complaint that, from at least 2001 through September 2003, former brokers Martin J. Druffner, Justin F. Ficken, Skifter Ajro, John S. Peffer, and Marc J. Bilotti defrauded mutual funds and their shareholders by misrepresenting their identities or the identities of their customers in connection with thousands of market timing trades after the mutual funds had restricted or blocked the defendants or their customers from further trading. According to the Commission's complaint, former branch manager Robert Shannon substantially assisted the brokers in their violations by, among other things, approving their market timing trades. Until September 2003, the defendants worked at a Prudential Securities branch in Boston, Massachusetts. According to the Commission's complaint, filed in federal district court in Boston, from at least 2001 through September 2003, numerous mutual fund companies blocked the defendants or their brokerage customers from further trading in their funds after the mutual fund companies detected market timing activity by the defendants. The complaint alleges that, to evade these blocks, the defendants concealed their own identities by using multiple broker identification numbers or concealed the identities of their brokerage customers by establishing additional brokerage accounts at Prudential Securities on behalf of the customers. The Commission's complaint alleges that Druffner, Ficken, Ajro, Peffer, and Bilotti violated Section 17(a) of the Securities Act of 1933 and violated or aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The complaint alleges that Shannon aided and abetted his co-defendants' violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission is seeking injunctive relief, disgorgement, penalties, and such equitable relief as the court deems appropriate. The Commission acknowledges the assistance of the Secretary of the Commonwealth of Massachusetts, the National Association of Securities Dealers, and the New York Stock Exchange in its investigation. The Commission's investigation is continuing. SEC Complaint in this matter