An internal review at Federated Investors uncovered 15 instances of after-hours trading, as well as rapid trading, by investment adviser Veras Partners.
Federated also said late Tuesday that it found “a few instances” in which employees made arrangements with Canary Capital Partners the hedge fund at the center of New York Attorney General Eliot Spitzer’s initial investigation and two investment advisers to permit frequent trading in several funds, including Federated’s S&P 500 index fund, Equity Income Fund and High Income Bond Fund.
As a result, two employees who met with the hedge fund resigned from the Pittsburgh-based firm. Federated also terminated the employment of an employee who deleted several e-mails relevant to the investigations.
To combat this problem, Federated said it is increasing the monitoring of frequent trading and the processing of fund orders placed after trading deadlines, and providing remedial training to employees.