A.G. Edwards Facing Disciplinary Action
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Brokerage firm A.G. Edwards Inc. said Tuesday that it faced possible disciplinary action by the U.S. Securities and Exchange Commission and the New York Stock Exchange.
In its quarterly report filed with the SEC, St. Louis-based A.G. Edwards said SEC staff intends to recommend that the agency bring a civil injunctive action over mutual fund transactions occurring before October 2003 and involving alleged “market timing.”
A.G. Edwards said it received a “Wells notice” indicating the possible action, and giving it a chance to respond.
Market timing is the rapid trading of securities to benefit from market inefficiencies at ordinary investors’ expense. It is often considered improper, but not necessarily illegal.
Separately, A.G. Edwards said the Big Board may bring a formal disciplinary action over the company’s Client Choice accounts, including the supervision of accounts with limited trading activity or large concentrations of mutual funds. Client Choice accounts are fee-based brokerage accounts, rather than commission-based.
A.G. Edwards said it made a Wells-type submission to the NYSE indicating why it believes no action should be brought.
A.G. Edwards shares fell $1.04 to $41.55. The company filed its quarterly report after U.S. markets closed.
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