Securities and Exchange Commission
Litigation Release No. 17555 / June 11, 2002
SEC FILES SETTLED CIVIL ACTION AGAINST EDWARD GOBORA, FORMER PORTFOLIO MANAGER AND HEAD OF FOREIGN EXCHANGE TRADING AT MERRILL LYNCH INVESTMENT MANAGERS, L.P.
SEC v. Edward F. Gobora, U.S. District Court for the District of Columbia, Docket No. 1:02CV01136 (RJL)
The Securities and Exchange Commission announced today that it has filed a settled enforcement action against Edward F. Gobora, the former global head of foreign exchange trading and a portfolio manager at Merrill Lynch Investment Mangers, L.P., an investment adviser registered with the Commisison. Without admitting or denying the allegations in the Commission's complaint, Gobora, age 35, of Newtown, Pennsylvania, consented to the entry of a final judgment which permanently enjoins him from violating the antifraud provisions of the federal securities laws and from violating reporting and recordkeeping provisions relating to investment advisers and investment companies. Gobora will pay a civil penalty of $75,000. Gobora also consented to a Commission Order which will bar him from association with any investment adviser for at least five years.
The Commission's complaint, filed in the U.S. District Court for the District of Columbia, alleges that, during the period 1997 through April 2001 Gobora defrauded Merrill Lynch clients in two ways. The first scheme involved "cherry picking" short term foreign exchange trades, with profitable trades allocated by Gobora to favored clients, and losing trades given to unfavored clients. The second scheme involved delaying the execution and allocation of foreign exchange trades that were prompted by client trades of foreign securities; if the market moved positively after a position was opened, Gobora allocated the trade to favored clients, with the original client trading the foreign exchange at the later, less favorable price. The Merrill Lynch clients that were hurt by these schemes included several U.S. registered investment companies.
Gobora will be permanently enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and from aiding and abetting violations of Sections 204, 206(1), 206(2) and 207 of the Investment Advisers Act of 1940 and Rule 204-2 thereunder, and from aiding and abetting violations of Sections 31(a) and 34(b) of the Investment Company Act of 1940 and Rule 31a-1 thereunder. The SEC is continuing its investigation of this matter as it relates to other parties.