New York's Attorney General, Eliot Spitzer last Thursday announced the indictment of a stock broker from the Manhattan firm Trautman Wasserman and Co. for defrauding mutual funds by trading their shares after hours, a practice known as 'late trading'.
Late trading is prohibited because it allows favored investors to take advantage of events that had not yet occurred when the market closed for the day.
The indictment is the latest action in the Attorney General’s wide-ranging investigation of the mutual fund industry.
It charges James A. Wilson, 36, of Manhattan with crimes relating to late trades that he placed on behalf of Trautman Wasserman’s hedge fund clients from late 2000 to September 2003, when the Attorney General’s investigation was announced.
To date, the investigation has resulted in guilty pleas by ten individuals in connection with the practice.
Each of the 11 charges being faced by Wilson carries a maximum penalty of four years in prison. In addition, each count carries a fine of up to $5,000, or double the amount of defendant's gain from the criminal conduct.
The defendant was arraigned on Thursday by the Hon. James A.Yates of New York County Supreme Court. He was released on $25,000 bail and ordered to remain in the New York tri-state area.
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