ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, April 20, 1996 TAG: 9604220021
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
DATELINE: BOSTON
SOURCE: Bloomberg Business News
The Securities and Exchange Commission, in an unusual public statement Friday, took issue with a newspaper report that it was investigating trading at Fidelity Investments, the largest U.S. mutual fund company.
The report, on the front page of Friday's editions of The Washington Post, said Jeffrey Vinik, manager of Fidelity's $56 billion Magellan Fund, and six other current and former Fidelity employees are being investigated for buying shares of companies before Magellan bought the same stocks. The practice is known as ``front-running.'' The report cited unnamed ``government and legal sources.''
In the statement, the SEC said ``the article contains inaccuracies which have led to erroneous impressions.'' It didn't elaborate. Typically, the agency doesn't comment on its investigative activities.
The Post didn't immediately say whether it would stand by or retract any part of the story. Robert Kaiser, managing editor, declined comment through an associate.
There isn't a formal or informal investigation under way into possible front-running at Fidelity, a person familiar with the situation said.
Officials at the Boston headquarters of Fidelity, which manages funds with $434 billion in total assets, denied the report in advance of the SEC statement.
``There is no investigation by the SEC into any personal trading activity of any Fidelity portfolio manager or any investment professional,'' said Anne Crowley, a spokeswoman for the firm.
``We were in contact with the SEC [Friday],'' said Crowley, and the conversation made Fidelity ``more comfortable'' with its earlier denial.
Mutual fund companies tightened rules on personal trading after Invesco Funds Group fired John J. Kaweske, a former money manager who handled $4.6 billion, in January 1994. Last November, Kaweske agreed to pay the SEC $115,000 to settle charges that he failed to properly disclose personal securities trades and other transactions.
The SEC examined Fidelity, among with many other mutual fund companies, in 1993 and 1994 and hasn't raised the issue of personal trading by fund managers since then, Crowley said.
The Post article said the SEC's investigation began in 1994 and involves trading by Vinik, manager of the nation's largest stock fund, and at least three other Fidelity fund managers, as well as three former employees.
The managers are Larry Greenberg, who runs Fidelity's emerging growth and VIP growth funds; Michael Gordon, who runs the retirement growth fund; and Harris Leviton, who manages the advisor strategic opportunities fund, the Post reported.
``I don't have anything to say,'' Vinik said when asked for comment about the report. Fidelity declined comment on behalf of the other managers.
Larry Bowman, a former Fidelity fund manager; Jeff Feinberg, a former assistant to Vinik; and Steve Shapiro, a former Fidelity analyst, also are under investigation, the paper said.
Bowman is now a money manager at Soundview Financial Group Inc. in Stamford, Conn.; Feinberg is a managing director at Soros Fund Management in New York; and Shapiro is an analyst at another New York firm, Tiger Management Corp.
Bowman couldn't be reached for comment on the report, and officials at Soros and Tiger declined comment.
Vinik and Magellan face 13 lawsuits over comments he made to U.S. News & World Report praising Micron Technology Inc., a semiconductor maker, at a time when he was selling shares.
The suits allege Fidelity manipulated the price of Micron.
Fidelity denied the allegations in a statement added to fund prospectuses.
LENGTH: Medium: 73 lines ILLUSTRATION: PHOTO: AP file/1992. Jeff Vinik\Magellan Fund head.by CNB