U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20413 / December 21, 2007
SEC v. Justin Ficken (United States District Court for the District of Massachusetts Criminal No. 1:07-cr-10427-PBS)
SEC v. Martin J. Druffner, et. al., United States District Court for the District of Massachusetts Civil Action No. 1:03-cv-12154-NMG
Former Prudential Registered Representative Indicted in Connection With Deceptive Market Timing Practices
Justin F. Ficken Charged with Conspiracy, Wire and Securities Fraud, and Obstruction of Justice
The Securities and Exchange Commission ("Commission") announced today that on December 19, 2007, the United States Attorney's Office in Boston, Massachusetts obtained an indictment against Justin F. Ficken of Boston, Massachusetts, related to Ficken's alleged deceptive market timing activity while working at Prudential Securities, Inc. Ficken was charged with one count of conspiracy to commit wire fraud and securities fraud, four counts of wire fraud, four counts of securities fraud, and one count of obstruction related to testimony he gave during the Commission's related investigation.
The Commission previously filed a civil enforcement action against Ficken and others. The Commission filed its complaint against Ficken, four other former Prudential Securities registered representatives, and their former branch manager, on November 4, 2003, and amended its complaint on July 14, 2004. The amended complaint alleged that Ficken was part of a three-person group of registered representatives, known as the "Druffner Group," that defrauded mutual fund companies and the funds' shareholders by placing thousands of market timing trades worth more than $1 billion for five hedge fund customers from at least January 2001 through September 2003. According to the amended complaint, Ficken knew that the mutual fund companies monitored and attempted to restrict excessive trading in their mutual funds. The amended complaint alleged that, to evade those restrictions when placing market timing trades, Druffner Group members disguised their own identities by establishing multiple broker identification numbers and disguised their customers' identities by opening numerous customer accounts for what were, in reality, only a handful of customers.
On September 13, 2007, a the U.S. District Court for the District of Massachusetts entered a final judgment against Ficken after having previously granted the Commission's motion for summary judgment against him. The Commission alleged that Ficken, a former registered representative of broker-dealer Prudential Securities, Inc., committed fraud in connection with his deceptive market timing trades in dozens of mutual funds. The final judgment enjoined Ficken from future violations of the federal securities laws and ordered him to pay $589,854 in disgorgement and pre-judgment interest. Ficken has appealed that judgment, and that appeal is pending.
For further information, please see: Litigation Release Numbers 20284 (September 14, 2007), 18784 (July 14, 2004), and 18444 (November 4, 2003). See also Exchange Act Release No. 54371 (August 28, 2006) [settled Order against Prudential Equity Group, LLC, formerly known as Prudential Securities, Inc., concerning deceptive market timing by its registered representatives]