1. Determine whether this case would be prosecuted as a criminal or civil offense, and state reasons to support your conclusion.
2. Who are the victims of this late-trading scheme, and what losses do they incur?
Several years ago, Prudential Securities was charged with fraud for late trading. This was the first major brokerage house to be charged with the illegal practice of buying mutual funds after hours.
The regulators who accused Prudential Securities charged them with carrying out a large-scale, latetrading scheme that involved more than 1,212 trades that was valued at a remarkable $162.4 million. These trades were placed after hours in order to benefit favored hedge funds. The complaint did not contain information regarding any profits that were protected by the scandal.