Civil
fraud charges against former Prudential Securities
brokers accused of market timing mutual funds will
likely stick even if the practice itself is not
illegal, lawyers said on Thursday. Federal and
state securities said in legal complaints filed
on Tuesday that the brokers changed their identities
to disguise market timing, the rapid trading of
mutual funds, and to keep trading in funds that
had terminated their accounts.
Lawyers
for the accused said on Tuesday their clients had
done nothing wrong, and that market timing was not
illegal. Robert Nelson, an attorney at Lieff Cabraser
Heimann & Bernstein who is prosecuting lawsuits
filed against mutual fund companies involved in the
widening probe of the $7 trillion industry, observed
that fraudulent behavior had occurred. "Fraud
involves the intent to deceive and to the extent
they changed their identities to deceive mutual funds
they will be culpable," he said. "Those
charges are sound."
According
to the complaint filed by Massachusetts Secretary
of the Commonwealth William Galvin, 68 mutual fund
companies wrote 25,000 to 30,000 letters to Prudential
warning of market timing and closing or freezing
accounts. |
