The U.S. Securities and Exchange Commission charged broker-dealer Lazard Capital Markets LLC and three employees for improperly entertaining traders at Fidelity Investments.

The firm was charged on Thursday with failing to supervise three employees who collectively spent more than US$600,000 while improperly entertaining traders at Fidelity Investments in an effort to generate brokerage business. The SEC also charged the three employees and a supervisor for their roles in securities laws violations by Fidelity traders. Earlier this year, the SEC charged Fidelity and current and former executives and employees for improperly accepting lavish gifts provided by brokers.

The SEC’s order against Lazard found that the firm failed to supervise the employees. It consented to the order without admitting or denying the findings, agreeing to be censured and pay disgorgement of US$1,817,629 plus prejudgment interest of US$429,379.04, and a penalty of US$600,000.

The employees also settled the SEC’s charges without admitting or denying the allegations. They were ordered to cease from committing or causing any further violations, to pay penalties, and will be suspended from associating with a broker, dealer or investment company for periods ranging from three to nine months.

“Mutual fund traders owe their loyalty and allegiance solely to the funds and their investors. When registered representatives provide mutual fund traders with prohibited travel, entertainment and gifts, it may impair their objective judgment and harm investors,” said George Curtis, deputy director of the SEC’s division of enforcement.