has fired a broker for allegedly helping clients place after-close trades. Reuters
reports that that the unidentified broker canceled mutual fund trades as late as 15 minutes after the stock market closed. The report is based on an internal memo authored by Sallie Krawcheck and Tom Matthews obtained by the news organization.
Krawcheck heads Citigroup's Smith Barney unit. Matthews is head of Smith Barney's private client division.
Reuters reports that the Krawcheck and Matthews memo says that this "lapse does not approach the degree of activities recently reported in the press."
"We committed to you to maintain the highest standards at Smith Barney, and this activity does not meet those standards," added the memo.
The scope of the broker's strategy appears to be far less ambitious than that used by two hedge funds also accused of late trading. Both Canary Capital Partners and Millennium Partners placed their late trades through fund clearing systems operated by third parties. Those systems allowed the hedge funds to place trades as late as 9 p.m. In contrast, the broker appears to have followed a far simpler scheme.
According to the report the broker, who was based in New Jersey, allowed clients to place orders for fund shares before the market close and then cancel them after the close of the market. Reuter also reports that the amount of funds traded in this way represented a "miniscule" amount of the broker's book.
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