The U.S. Securities and Exchange Commission today issued an order sanctioning the former head of a brokerage’s retail division for failing to prevent market timing.

The SEC issued an order against Michael Rice, the former executive director and president of the Private Client Group of Prudential Securities, Inc. The order found that Rice failed reasonably to supervise former PSI registered representatives who used fraudulent and deceptive trading practices to evade restrictions on market timing imposed by the mutual fund companies whose funds they traded.

From at least November 2000 until at least June 2003, Rice became aware of numerous red flags which indicated that certain PSI registered representatives were using deceptive practices to engage in market timing but failed to take effective steps to respond to these red flags, it said. “Due in part to Rice’s failure to take effective action, the registered representatives’ widespread use of fraudulent and deceptive practices continued until at least June 2003,” the SEC added.

The order suspends Rice from association in a supervisory capacity with any broker, dealer, or investment adviser for 12 months. It also directs Rice to pay a civil money penalty of US$100,000.

Rice consented to the issuance of the order without admitting or denying the commission’s findings, except as to the commission’s jurisdiction over him and the subject matter of the proceedings.