Wall Street watchdogs nailed Jefferies Group with nearly $10 million in fines, claiming that the brokerage firm let an executive use company cash to ply Fidelity Investments’ traders with lavish gifts – including underwriting a booze-fueled bachelor party replete with strippers and dwarves – to win business.
The Securities and Exchange Commission and the National Association of Securities Dealers painted an unflattering portrait of Jefferies as a second-tier firm where former star equity salesman Kevin Quinn ran wild with a nearly $1.5 million expense account.
According to the complaints, Quinn catered to nearly every whim of Fidelity’s stock traders, shipping them rare cases of French wine, providing private jet service for their family vacations, and getting them the best seats at dozens of concerts.
He spent $125,000 to take Fidelity pros to the Super Bowl in Houston with a weekend of entertainment that included parties hosted by Maxim and Playboy magazines.
While every Wall Street firm wines and dines clients, Jefferies raised the bar in March 2003 when it paid more than $75,000 for Fidelity’s Thomas Bruderman – a key equity trader – to have a truly memorable bachelor party.
Quinn booked a private jet and hired limos for the party in Miami; festivities included dwarf-tossing and ogling strippers.
Danny Black, The Lansing, Mich.-based dwarf at the center of the party, confirmed to The Post that dwarf tossing was part of the activities.
“What’s a party without drunken dwarf tossing?” asked Black. He confirmed that “scantily clad” strippers were around the party, but declined further comment on the activities.
Quinn, who was fired in 2004, was himself lavishly compensated, getting a $4 million guarantee from the firm in 2002 that was later bumped to $4.75 million.
In an SEC filing, Jefferies President Rich Handler is referenced as anticipating that Quinn could bring in up to $50 million in annual commissions from Fidelity.
Before the NASD caught Jefferies during a routine audit in late 2004, Quinn’s obsessive entertaining and gift-giving catapulted Jefferies from $1.7 million in commissions with Fidelity in the first six months of 2002 to $24.5 million in business by September 2004.
The NASD fined the firm $5.5 million, and the SEC forced it to disgorge $4.2 million in ill-gotten gains plus interest. Quinn was barred from working as an NASD member firm for life and paid a $468,000 disgorgement.
His boss, equity division chief and executive committee member Scott Jones, paid a $50,000 fine and was barred from supervisory duties for three months. He is still employed at the firm, according to a firm spokesman.
A Jefferies spokesman said: “We are pleased to have this matter behind us and will continue to focus on serving our clients.”
—
Anything goes
Broker-dealer Jefferies Group laid on lavish gifts, travel and entertainment to snare business from investment giant Fidelity. Some of the bounty:
Expense tab
* Dwarf-tossing
* Exotic dancers
* Miami bachelor party
* Tickets to a Justin Timberlake-Christina Aguilera concert