The U.S. Securities and Exchange Commission has settled with eight former employees of Fidelity Investments’ equity trading desk over allegations that they improperly received travel, entertainment, and gifts paid for by brokers courting business from Boston-based Fidelity, the SEC announced Thursday.

As a result of the settlements, the former employees will collectively pay more than US$1 million to settle the SEC charges.

The commission initiated administrative proceedings on March 5 against 10 former Fidelity employees. The SEC’s orders issued today find that they violated the federal securities laws by accepting prohibited compensation from brokers including private jet trips, lodging and premium sports tickets. In addition, it found that the head of the trading desk was a cause of Fidelity’s failures to seek best execution and disclose conflicts of interest to its clients, and that he failed to supervise the 10 traders.

“By accepting improper gifts from brokers, these individuals squandered the most important commodity in the financial services industry — investor trust,” said George Curtis, the SEC’s deputy director of enforcement.

The order bars the former head of the trading desk from associating with an investment adviser or investment company for one year; orders him to pay US$106,000 in disgorgement, US$36,475 in prejudgment interest, and a US$125,000 penalty; and orders him to cease and desist from committing or causing any further violations. He consented to the order without admitting or denying the findings.

The commission’s orders against the traders impose censures and order that they cease and desist from further violations. They also settled the charges without admitting or denying the commission’s findings, and will pay disgorgement, prejudgment interest and penalties.

IE