SEC Slaps Peter Lynch On The Wrist
According to Fortune,
“Lynch “obtained numerous free tickets to concerts, theater and sporting events paid for by outside brokers through his requests to two traders on Fidelity’s equity trading desk,” the SEC alleges. “
and
“‘The broker selection process on Fidelity’s equity trading desk was compromised when gifts and lavish entertainment swayed the flow of brokerage business,’ the SEC said in a press release. ‘This misconduct created a serious risk of investor harm and violated Fidelity’s duty of allegiance and loyalty to investors.’”
Towards the end of the article, the author makes light of the fact that a total penalty of $20,086 is peanuts next to Lynch’s multi-million dollar fortune. That may be, but what struck me was what motivates somebody making millions per year to risk the SEC’s wrath by taking this gifts? It doesn’t make any sense at all to me. Lynch probably wouldn’t even have noticed the cost of buying those tickets himself. Where’s the upside?
The even larger issue in my opinion is, why isn’t Fidelity being held responsible? They have a fiduciary duty to their mutual fund shareholders to minimize unnecessary transaction costs. At the very least, I think there should be some sort of compensation to the shareholders of the time, even if it’s only a few dollars each. What do you think?
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