Report: Traders Probed for Illegal Trading

Monday, February 7th 2005, 9:53 am
By: News On 6

NEW YORK (AP) _ As many as 20 individual traders on the New York Stock Exchange floor are under investigation by the U.S. attorney's Manhattan office for allegedly using illegal trading practices to cheat customers, according to a published report Monday.

The New York Times, citing an unidentified person who has been briefed on the inquiry, said the move is an extension of an investigation by the Securities and Exchange Commission and NYSE into the trading of specialists, the auctioneers who manage buying and selling of particular stocks. That investigation was begun by the NYSE in 2002. The SEC got involved after determining the Big Board was not being aggressive enough.

In March 2004, five specialist firms agreed to a $241 million-plus settlement with regulators to resolve illegal trading allegations. The firms were Bear Stearns Cos. subsidiary Bear Wagner Specialists, Fleet Specialist Inc., now part of Bank of America Corp., LaBranche & Co., Van der Moolen Specialists and Goldman Sachs subsidiary Spear, Leeds & Kellogg. The settlement did not include any acknowledgment or denial of wrongdoing.

The current investigations focus on about 10 to 20 individuals, the newspaper said quoting a person described as having been briefed on the case. The newspaper did not identify the person.

The NYSE, SEC and U.S. Attorney's office declined comment, the newspaper reported, as did four of the specialist firms. A call seeking comment from Van der Moolen was not returned, according to the publication.