The Labor Department has joined several federal and state agencies investigating E.F. Hutton & Co. as a result of its plea of guilty to 2,000 counts of mail and wire fraud in a huge check-kiting scheme, the firm told the Securities and Exchange Commission Monday.
The parent Hutton Group said it has been notified by the Labor Department that it intends to determine whether to take any action under a provision of the Employee Retirement Income Security Act, the federal pension law.
The Hutton Group manages about $1 billion in ERISA-covered funds, a spokesman said yesterday.
In a quarterly report to the SEC, the group said that it is subject to numerous federal and state laws, and also rules of self-regulating private bodies, all of which provide that conviction of a crime such as mail and wire fraud is a basis for possible revocation or suspension of a broker-dealer or investment-adviser license.
Since Hutton entered the guilty plea and signed a civil injunction May 2, the SEC has begun two investigations: one to determine whether to make permanent a 180-day exemption from ineligibility to act as an investment adviser, and another to ascertain if the company violated the securities laws. In addition, the Connecticut Department of Banking is holding a hearing on why Hutton's registration as a broker-dealer and investment adviser should not be revoked.
Hutton told the SEC that it is having talks with the Commodities Futures Trading Commission as to whether there have been violations of the Commodity Exchange Act, and that the New York Stock Exchange and the North American Securities Administrators Association -- composed of the 50 states' securities commissioners -- are conducting inquiries "into the the plea, the injunction, and the underlying conduct."