UPDATE 1-Mellon says fires three in stock surveillance probe
Wed Dec 8, 2004 07:47 PM ET
(Recasts, adds details from Mellon memo, company comments)
By Chris Sanders
NEW YORK, Dec 8 (Reuters) - Mellon Financial (MEL.N: Quote, Profile, Research) said in an internal memo on Wednesday it fired three employees and disciplined another for what a spokesman said was exchanging confidential information about stock ownership for gifts.
A copy of the memo, which had been sent by company Chairman Martin McGuinn, was given to Reuters by spokesman Ken Herz. The memo did not contain the names of the people involved.
Earlier on Wednesday, the Wall Street Journal newspaper reported that U.S. market regulators had sent subpoenas to companies that gather stock purchase and sale data. According to the newspaper, the subpoenas were for information on whether employees tried to bribe people to get data that sometimes can lead to insider trading.
CIBC Mellon Global Securities Services Co., a Mellon joint venture with Canadian Imperial Bank of Commerce (CM.TO: Quote, Profile, Research) , also fired an employee for giving out secret data, according to Cheryl Ficker, a spokeswoman for the venture.
Mellon and the joint venture said they voluntarily alerted the U.S. Securities and Exchange Commission and affected customers about the measures the companies had taken.
Both companies said they were cooperating with the SEC's investigation.
Herz said the bank would not comment on whether it had received a subpoena, while Ficker said CIBC Mellon had not been subpoenaed.
The Wall Street Journal report, citing unnamed sources, said the companies that had been subpoenaed included Thomson Corp.'s (TOC.TO: Quote, Profile, Research) Thomson Financial, Ilios Partners, the Georgeson Shareholder Communications Inc. unit of Australia's Computershare Ltd.(CPU.AX: Quote, Profile, Research) and Miller Tabak & Co. which has a unit called Strategic Stock Surveillance.
According to the newspaper report, the SEC is looking into firms that may have paid gratuities to back-office workers at custodian banks with share purchase and sale information, knowledge that could be used by investors for illegal insider trading.
The Wall Street Journal reported that an internal company probe had discovered that a back office clerk at CIBC Mellon Global Securities Services Co. gave out secret data on stockholdings for tickets to sporting events and payments of $50 to $100. The newspaper said another internal probe revealed that four employees at Mellon Financial Corp. (MEL.N: Quote, Profile, Research) disclosed similar information for baseball tickets, $50 American Express gift certificates and boxes of steaks.
Ficker declined to comment on the specifics of the newspaper story. Herz called the story accurate. (Additional reporting by Carolyn Koo)
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