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U.S. Securities and Exchange Commission

Litigation Release No. 22047 / July 18, 2011

SEC v. Martin J. Druffner, et. al., United States District Court for the District of Massachusetts Civil Action No. 03-12154-NMG

COURT ENTERS ORDER AGAINST FORMER PRUDENTIAL REGISTERED REPRESENTATIVES IN CONNECTION WITH DECEPTIVE MARKET TIMING PRACTICES

Martin J. Druffner Ordered to Pay $1,131,157 in Ill-Gotten Gains and Prejudgment Interest; Skifter Ajro Ordered to Pay $124,427

The Commission today announced that, on July 13, 2011, a Massachusetts federal court entered an order against Martin J. Druffner of Hopkinton, Massachusetts, and Skifter Ajro of Milford, Massachusetts, two defendants in a civil injunctive action filed by the Commission on November 4, 2003, requiring them to pay $1,131,157 and $124,427, respectively, in disgorgement and prejudgment interest. The court had previously entered judgments against Druffner and Ajro on October 10, 2006 enjoining them from future violations of the federal securities laws. The Commission alleged in its complaint that Druffner and Ajro, former registered representatives of broker-dealer Prudential Securities, Inc., committed fraud in connection with their deceptive market timing trades in dozens of mutual funds.

The Commission filed its complaint against Druffner and Ajro, three 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 Druffner and Ajro were part of a group of registered representatives 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, Druffner and Ajro 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, members of the group 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.

The order was entered by the Honorable Nathaniel M. Gorton of the United States District Court for the District of Massachusetts.

In addition to the Commission's civil injunctive action, Druffner pled guilty to four counts of securities fraud and four counts of wire fraud on September 15, 2006. He was sentenced to 6 months of home confinement, three years of probation, and a $4,000 fine. He was also barred from associating with any broker, dealer, or investment adviser on March 17, 2006. Similarly, Ajro pled guilty to four counts of securities fraud and four counts of wire fraud on August 9, 2006. He was sentenced to two years of probation and a $2,000 fine. He was also barred from associating with any broker, dealer, or investment adviser on February 2, 2006.

For further information, please see: Litigation Release Numbers 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]; Exchange Act Release No. 53513 [Order barring Druffner]; Exchange Act Release No. 53206 [Order barring Ajro].

 

http://www.sec.gov/litigation/litreleases/2011/lr22047.htm


Modified: 07/19/2011