The Wall Street Journal reports that Jefferies & Co has agreed to pay $10.3m (without admitting wrongdoing) to settle allegations that a former EVP 'lavished gifts on mutual-fund traders and treated them to expensive trips to win their business'.
The gifts, which in the main were used to court 5 Fidelity traders between 2002 and 2004, are said to have included tickets to Wimbledon and the US Open, a four-day golf trip to Las Vegas, a $125,000 Super Bowl bash and $75,000 for that infamous 'dwarf-tossing' party which took place in March 2003.
According to The Financial Times, Jefferies hired Kevin Quinn in 2002, and gave him a $1.5m annual travel and entertainment budget to boost their institutional business. And that, by all accounts, he did - the firm is said to have received $60m in trading commissions during the two years he worked there, much of which came from Fidelity.
Quinn is said to have been 'terminated' when the extent of his entertainment efforts became known. A Jefferies spokesperson said that the firm is 'pleased to have this matter behind us'. The irregularities came to light during a routine audit undertaken by regulator NASD in 2004. And James Schorris, NASD's head of enforcement, said that 'we (eventually) looked at 40 different firms that did institutional business, and there was an industry-wide failure to track entertainment and gifts'.
For those of you who don't already know, dwarf-tossing, which became popular in the 1980s, involves throwing a dwarf dressed in a Velcro suit, usually at a Velcro-covered wall.