US Financial Watchdog Announces Two Enforcement Actions

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Last updated at: (Beijing Time) Friday, July 11, 2003

US Financial Watchdog Announces Two Enforcement Actions

The Securities and Exchange Commission, the US financial watchdog, on Thursday announced two enforcement actions involving Prudential Securities Inc.

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The Securities and Exchange Commission, the US financial watchdog, on Thursday announced two enforcement actions involving Prudential Securities Inc.

In a settled action, the commission found that from 1998 to 2000, Prudential, a registered broker-dealer, had inadequate systems in place to effectively monitor and enforce its policies and procedures relating to sales of different classes of mutual funds, according to a statement released by the commission Thursday.

In resolving the matter, Prudential agreed, without admitting or denying the commission's findings, to pay 82,000 US dollars, which will be returned to investors harmed by the conduct described in the actions, and a civil penalty in the amount of 300,000 dollars, said the statement.

In an unsettled action, the commission issued an administrativeorder instituting proceedings against Robert Ostrowski, a former Prudential registered representative, and Rees T. Harris, a formerPrudential branch office manager.

On at least 42 occasions, Ostrowski has been charged with violating the antifraud provisions of the federal securities laws in connection with sales of mutual funds to his customers.

Harris has been charged with failing to supervise Ostrowski by failing to monitor his compliance with Prudential's policies and procedures regarding the sale of mutual fund shares.

A hearing will be scheduled before an administrative law judge in the action against Ostrowski and Harris to determine whether the allegations contained in the order are true and to determine whether any remedial action should be ordered, or penalties imposed, by the commission.

The statement from the commission also quoted Arthur S. Gabinet,district administrator of the commission's Philadelphia District Office, as saying "Prudential's settlement of the commission's charges is a positive and constructive response to a serious supervisory failure."

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