Oppenheimer & Co.
reported that several current and former employees are facing potential regulatory action over their involvement in abusive mutual fund trading.
The brokerage's disclosure late Monday confirms an earlier report in
18-month investigation of Oppenheimer by the
Securities and Exchange Commission
and New York Attorney General Eliot Spitzer is nearing a conclusion.
In the regulatory filing, Oppenheimer did not disclose the names or number of employees who were notified by the SEC that they could face civil charges over their actions. The firm said two of the employees were supervisors who continue to be employed by Oppenheimer.
The firm isn't related to OppenheimerFunds.
previously reported that Robert Okin, an Oppenheimer executive vice president, and Marshall Dornfeld, a managing director, were two employees under regulatory scrutiny, according to people familiar with the inquiry. Regulators have focused on the two executives because of the role each played at Oppenheimer in overseeing abusive mutual fund trading by
former broker Michael Sassano and his former team of 15 traders and junior brokers.
Lawyers for the two men could not be reached for comment.
The firm's filing said the abusive mutual fund trading activities at Oppenheimer occurred "largely during the period'' that the brokerage group was part of CIBC World Markets, a division of
Canadian Imperial Bank of Commerce
. It said the activities were limited to a "single branch.''
Sassano and his team were the only brokers at Oppenheimer permitted to engage in mutual fund market-timing, one of the abusive trading practices at the heart of the investigation. Probes by Spitzer and the SEC have netted about $3 billion in fines and restitution from a dozen mutual fund companies and brokerage firms. In his heyday, Sassano was one of the top market-timing brokers on Wall Street.
Regulators believe that much of Sassano's abusive trading in shares of mutual funds was sanctioned by members of Oppenheimer's management, who saw it as a potential profit center. A year ago, Oppenheimer suspended Sassano and disbanded his 15-member team. By the end of December, all of the Sassano team members had left the firm.