Fidelity Fined in Document Destruction

It will pay out $2 million for an alleged plot by its brokerage to goose scores on regulatory reviews.
Publish date:

Securities regulators fined the brokerage arm of

Fidelity Investments

$2 million for permitting its employees to alter and destroy documents at "numerous" branch offices.

Regulators charge that employees at 21 branch offices of Fidelity Brokerage Services were encouraged to alter or destroy records in order to achieve better scores on annual inspections of the books and records at the branches. The document destruction took place between January 2001 and July 2002.

The fine stems from a joint investigation conducted by the

Securities and Exchange Commission

and the

New York Stock Exchange

. Fidelity, as is customary in a regulatory settlement, neither admitted nor denied the charges.

In a related matter, the NYSE also disciplined seven former Fidelity brokerage employees for their role in the document destruction and alteration scheme.

"Destroying and 'cleaning up' files in advance of internal inspections or NYSE examinations corrupts the integrity of the regulatory process and will not be tolerated,'' said the NYSE's chief of enforcement, Susan Merrill, in a press release.