Fidelity Investments Vice Chairman Peter Lynch, former head trader Scott DeSano and 11 employees accepted more than $1.6 million worth of gifts from brokers jockeying to trade for the world’s largest mutual-fund company, U.S. regulators said.

Fidelity Investments Vice Chairman Peter Lynch, former head trader Scott DeSano and 11 employees accepted more than $1.6 million worth of gifts from brokers jockeying to trade for the world's largest mutual-fund company, U.S. regulators said. 2

Fidelity Investments Vice Chairman Peter Lynch, former head trader Scott DeSano and 11 employees accepted more than $1.6 million worth of gifts from brokers jockeying to trade for the world’s largest mutual-fund company, U.S. regulators said.

Fidelity will pay $8 million to settle the U.S. Securities and Exchange Commission’s claims, the agency said yesterday in a statement. The brokers’ inducements included a $160,000 junket to Miami, where bachelor party attendees were entertained by female escorts and supplied with ecstasy pills, the SEC said.

The settlement concludes a three-year probe that tainted the Boston-based money manager, known for policies aimed at protecting fund investors. The company failed to seek the best terms when trading for the funds because employees routed the transactions to brokers who doled out Super Bowl tickets and private-jet trips to Mexico, the SEC said.

“It was a highly embarrassing episode for Fidelity,” Burton Greenwald, a mutual-fund consultant in Philadelphia, said in an interview. “It created a real blemish on a reputation that it took them years to build.”

Fidelity and Lynch didn’t admit or deny wrongdoing in the case, which doesn’t name the brokers involved or their firms.

“We do recognize the seriousness of the misconduct,” even though the SEC didn’t assert that Fidelity harmed shareholders or its funds, the company said in a statement. “The behavior that led to these settlements is not at all indicative of the ethical standards of our company.”

Fidelity disciplined staff involved and took steps to prevent future misconduct, it said. Most of the employees cited by the SEC have left the company, and none remain on the trading desk, the firm said.

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