Fidelity Traders Probed

Federal regulators are investigating whether traders at Fidelity Investments improperly steered business to siblings working at brokerage firms, a newspaper reported Sunday.

A broad investigation into potential conflicts of interest in the mutual fund industry includes an examination of half a dozen traders at Boston-based Fidelity who may have siblings at brokerages and may have improperly done business with them, the Boston Globe reported. The newspaper cited lawyers and others familiar with the investigation whom it did not identify.

Workers at brokerage firms receive commissions for finding buyers and sellers and helping to execute securities trades. But traders are supposed to act in the best interest of the shareholder, choosing brokers who offer the best service and prices -- regardless of family relationships or gifts the brokerages might give them.

Among the relationships being examined is that of David Donovan, 42, a trader with Fidelity, and his brother, Peter Donovan, 36, who handles Fidelity business at Banc of America Securities in Boston, the newspaper reported.

David Donovan, who deals in high-tech stocks, did business directly with his younger brother, lawyers and others told the Globe. Neither of the Donovans would comment to the Globe.

Fidelity and several brokerages that handle the mutual fund giant’s trading have received subpoenas in the investigation disclosed last month by the Securities and Exchange Commission.

Fidelity spokeswoman Anne Crowley said the company didn’t absolutely prohibit employees from doing business with family members. But she said the company’s code of ethics required employees to place shareholder interests first.