Fine for Fraud Funds Program
When E.F. Hutton pays ... everybody learns.
In addition to a $100,000 settlement to Missouri residents, E.F. Hutton and Co. is giving $50,000 to a state-sponsored education program on safe investing.
The settlement is part of a $2-million federal fine against Hutton that was levied after the company's guilty plea last May to 2,000 counts of mail and wire fraud.
The company agreed to pay $125 to each of 800 Missourians who bought Hutton-sponsored investments between Jan. 1 and May 2, 1985. The firm violated the law because it did not tell investors that a federal grand jury was investigating its banking practices, according to John Perkins, commissioner of securities for the Missouri Secretary of State's office.
The $100,000 rebate--the largest Hutton distribution to the residents of any state--is equal to the profit made on the Missourians' investments, he said.
In addition, the company agreed to put $50,000 into the state's investment-education program. That effort, begun last fall with about $10,000 in state funds, is aimed at students and other groups that might be susceptible to fraudulent investments, Mr. Perkins said.
The state has produced videotapes and pamphlets, including one entitled "101 Questions to Ask Before Investing."
About 500 teachers have attended the state's investment seminars so far, Mr. Perkins said. The teachers then pass the information on to their students.
He said that the state received the money from E.F. Hutton this month, and hopes to use it to expand the program to adult-education students and senior citizens.
"When this case came along, quite frankly, it was hard to decide the appropriate remedy," Mr. Perkins said. "We were trying to be somewhat creative."
As part of the agreement, Mr. Perkins said, E.F. Hutton's name cannot be identified with the program for the next two years.
Vol. 05, Issue 22, Page 19