Fidelity Subpoenaed by Spitzer - TheStreet

Fidelity Investments

has received a subpoena from New York Attorney General Eliot Spitzer, who is investigating charges of market-timing and late-day trading in the mutual fund industry.

Fidelity, based in Boston, is the nation's largest fund manager.

"We received a subpoena late last week requesting information on market timing and late trading," said spokeswoman Anne Crowley,


reported. "We will fully cooperate with all of the attorney general's requests."

A subpoena is a request for information and not a presumption of wrongdoing.

Spitzer's office declined to comment,



Late trading enables a trader to purchase shares in a mutual fund after the close of trading, but at their 4 p.m. price.

Market-timing is an arbitrage strategy that allows savvy traders to take advantage of the time differences between the closing of the U.S. markets and foreign exchanges.

Spitzer's investigation in the last month has shone the spotlight on numerous individuals and trading concerns:

Three Merrill Lynch brokers were fired last week for their association with Millennium Partners, a hedge fund investigated in late-day trading.

A former trader at Millennium, Steven Markovitz, earlier last week pleaded guilty to late-day trading.

The investigation also may have claimed a dozen traders and supervisors at Prudential Securities


A portfolio manager at Alliance Capital was suspended last month.

Theodore Sihpol, a Bank of America broker, was criminally charged last month.

Early last month, Canary Capital Partners, a New Jersey hedge fund, paid $40 million to settle with Spitzer over allegations it reaped millions of dollars from market-timing and late-day trades.