updated 5/6/2005 2:28:07 PM ET 2005-05-06T18:28:07

The investigation into whether some traders at Fidelity Investments were given gifts, including sex and drugs, by Wall Street bank brokers in an effort to win the firm’s trading business has widened to include a federal criminal probe, published reports said.

The New York Times and The Boston Globe, citing unnamed attorneys described as being involved in the case, said a grand jury convened by U.S. Attorney Michael J. Sullivan is investigating Fidelity’s stock-trading desk and has issued subpoenas to numerous traders and brokers. The Times reported the probe on Thursday, and The Globe on Friday.

Among the allegations are that Fidelity traders and brokers that handled the mutual fund company’s business traded tips about privileged stock information for lavish gifts and that Fidelity traders were given drugs as a reward for directing business to the brokers, the newspapers reported.

The U.S. Securities and Exchange Commission and the National Association of Securities Dealers also have been investigating possible violations of securities laws.

“We have been cooperating fully with all inquiries concerning gifts and gratuities, and while there is an ongoing inquiry we’re not going to have further comment,” Fidelity spokeswoman Anne Crowley said.

A spokeswoman for the U.S. Attorney in Boston did not immediately return a telephone call Friday.

Investigators have been asking witnesses whether drugs were given to the Fidelity traders as part of an arrangement for the brokers receiving trading business, according to the news reports.

The unnamed attorneys told the newspapers that there are numerous references to drug use and sex on records of e-mail and phone calls among the traders and brokers that investigators now have.

Sullivan is trying to determine whether any crimes were committed among a group of traders and brokers who mixed business and partying. The perks included trips to the Super Bowl and fancy golf courses, tickets for the Wimbledon tennis tournament in England, lavish dinners and transportation on a private jet to a bachelor party for a Fidelity trader in South Beach in Miami, as well as a weekend on a yacht.

After the allegations surfaced last November, Fidelity launched its own internal review.

To date, no one has been charged with any wrongdoing. However, 14 people at Fidelity have been disciplined, and at least five traders have left the firm, which manages more than $1 trillion in assets.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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