BOSTON -- Fidelity Investments, the world's largest mutual fund company, said a senior trader became the fifth employee to leave since regulators began investigating the firm's relationship with brokerages.
David K. Donovan Jr., 42, a technology sector trading leader, left the company Tuesday, said Anne Crowley, a spokeswoman for Boston-based Fidelity. Donovan's brother, Peter, resigned Wednesday as a managing director and sales trader with Banc of America Securities LLC in Boston, spokesman Rob Ingram said.
Regulators are investigating a trade in the personal account of the Donovans' mother to see if it was connected with Fidelity's position in the stock, the Boston Globe reported Friday. Crowley would not comment on the reasons for David Donovan's departure.
Since October, the Securities and Exchange Commission and the NASD have been examining evidence that brokers may have lavished Fidelity employees with expensive wine and trips to the Super Bowl in an effort to win trading commissions. Regulators also have looked into the relationships between Fidelity traders and relatives employed at brokerage firms.
David Donovan, who did not return calls by Bloomberg to his home, told the Globe the inquiry concerned one trade by his mother, Concetta, that did not involve him. Investigators are focused on a trade of shares of San Jose-based Covad Communications Group Inc., the newspaper said.
Walter Ricciardi, head of the SEC's Boston office, was not available for comment. Valerie Carter, an attorney for Concetta Donovan, did not return a call to her Boston office.
Robert Knuts, a lawyer for Peter Donovan, was not available at his New York office. Peter Donovan, who had been a sales trader with Banc of America Securities since 1999, did not return calls to his home.
David Donovan's lawyer, Raipher Pellegrino, declined to comment on the reasons for his client's departure.
"We are in the midst of working out separation issues," Pellegrino said. David Donovan had worked for Fidelity since 1992.
Fidelity's code of ethics requires that employees seek approval for personal trades before making a transaction in securities that could be traded by its funds, according to the company's Web site. They also are required to conduct personal trading through a Fidelity brokerage account.
Four other traders have left the firm since the probes began. Fidelity said in December that 14 others had been disciplined with sanctions including suspensions and fines. Among those penalized was equity trading chief Scott DeSano.
Officials began seeking information from Fidelity and about two dozen other firms, including brokerages and investment managers, after a Boston sales trader with Jefferies Group Inc. was fired in October for improper travel and entertainment costs.
