Borsa: Nyse; Procura Incrimina 15 'specialist' Per Frode

[Spike V]

BORSA: NYSE; PROCURA INCRIMINA 15 'SPECIALIST' PER FRODE)
(ANSA) - ROMA, 12 apr - L' incriminazione decisa dalla
procura newyorkese e' stata decisa come conseguenza dell'
inchiesta biennale sull' attivita' degli intermediari, che sul
Nyse hanno il compito di assicurare il regolare svolgimento
delle contrattazioni. Nell' ambito di questa stessa indagine lo
scorso anno sette societa' di intermediazione avevano accettato
di pagare complessivamente 247 milioni di dollari, a titolo di
'patteggiamento' dopo le accuse loro rivolte di aver tratto
profitti illeciti da quest' attivita', a spese della clientela.
Il procuratore Kelley sulla scia di quest' inchiesta aveva
avviato a sua volta un' indagine allo scopo di verificare le
responsabilita' individuali degli 'specialist'. Lo stesso
procuratore, nel preannunciare l' incriminazione degli
intermediari, ha specificato che si sono macchiati in
particolare di condotta fraudolenta in circa quattro anni di
attivita'.

[FaGal]

Ma interessano queste notizie wowwwwwwwwwww!!!!!!!!!

Finalmente qualcuno!!!!!

[FaGal]

Ex-NYSE traders facing indictment
money.cnn.com - April 12, 2005

Former specialists charged with trading to benefit their firms at the expense of their clients.


NEW YORK - Several former New York Stock Exchange traders who oversaw stock auctions on the floor face indictment Tuesday on charges that they traded to benefit their firms at the expense of their customers, people familiar with the matter told The Wall Street Journal.

The criminal probe by federal prosecutors in New York City grew out of a civil case against the seven firms that employ the traders, known as specialist firms. Without admitting or denying wrongdoing, those NYSE specialist firms last year paid a total of $247 million to settle charges that their employees interfered with customer orders or put them aside, usually for just a few crucial seconds, so they could trade their firm's own money, taking advantage of their knowledge of which way the market was moving.

The Securities and Exchange Commission also is expected to file civil securities-fraud charges against a bigger group of more than a dozen former specialists, including onetime employees of four of the Big Board's five major specialist firms, people familiar with the matter said. They are Bank of America Corp.'s (BAC) Fleet Specialists unit; Van der Moolen Holding NV's Van der Moolen Specialists USA ; Goldman Sachs Group Inc.'s (GS) Spear, Leeds & Kellogg; and Bear Stearns Cos.' (BSC) Bear Wagner.

In a rare move, the SEC also is expected to file and settle charges against the New York Stock Exchange for allegedly not properly policing floor traders.

The cases represent one of the most wide-ranging enforcement actions against NYSE specialists in years. As many as 10 individual specialists could face criminal charges, people familiar with the probe said. Individuals who worked at Fleet, Bear Wagner and Van der Moolen are expected to surrender to federal authorities Tuesday morning, the people said. David N. Kelley, the U.S. attorney in Manhattan, also plans to hold a news conference on the matter, according to people familiar with the probe.

[Spike V]

Originalmente inviato da FabioGalletti

Ma interessano queste notizie wowwwwwwwwwww!!!!!!!!!

Finalmente qualcuno!!!!!

sadico

[FaGal]

April 13, 2005
15 Specialists From Big Board Are Indicted
By JENNY ANDERSON

Federal prosecutors announced the indictment yesterday of 15 former New York Stock Exchange floor traders, who are charged with cheating customers by mishandling trades to enrich their firms.

The Securities and Exchange Commission also filed securities fraud complaints against the 15 and against 5 other traders, saying they had made thousands of illicit trades from 1999 through 2003. The 20 were specialists - traders on the floor of the exchange who manage activity in particular stocks. The Big Board also settled S.E.C. accusations that it failed to regulate its traders properly.

The joint enforcement action is another black eye for the New York Stock Exchange, which has had scandals in recent years, and comes at a pivotal moment in the exchange's evolution. While the S.E.C. recently endorsed its floor-based system as part of an overhaul of how stocks are traded in the United States, the Big Board was still forced to make some radical changes. A hybrid system allows more electronic trading while maintaining the core floor-based operations.

But a backbone of the New York Stock Exchange is the specialist, a trader who has the obligation to create an orderly market in the stocks he or she supervises.

Critics of the system, often proponents of purely electronic markets, say the human element slows the process, creates conflicts of interest - all the traders buy and sell for their company's account as well as for customer accounts - and is unnecessary, given the technology that is available.

Defenders of the exchange say that because of the large volume of stock that is traded there, it offers better prices with fewer fluctuations while providing the opportunity for human judgment when such judgment is needed. About 1.6 billion shares a day, worth $56 billion, are currently traded on the Big Board.

At its heart, the case again raises the question of whether self-regulatory organizations like the New York Stock Exchange can successfully police themselves. Yesterday's indictments represented the second big floor-trading scandal in recent years. In 1999, the S.E.C. found that the Big Board failed to uncover and halt illegal proprietary trading by a ring of independent floor brokers.

While the Big Board uncovered the original instances of improper trading in this latest case, it failed to follow through, leading to S.E.C. supervision of the investigation. Last year, the S.E.C. brought enforcement actions against seven specialist firms. The firms paid more than $243 million without admitting wrongdoing. The S.E.C. is considering whether to change the self-regulatory model.

Federal regulators say the specialists engaged in two illegal trading schemes: using knowledge of a trade to deal in front of it, and "interpositioning," which occurs when a specialist intervenes in a trade rather than matching buy and sell orders.

The 15 specialists indicted, all but two of whom have left their firms, were members of the New York Stock Exchange's five major specialist trading companies. They are accused of making illegal trading profits from interpositioning of $13.4 million and costing investors more than $19 million from trading for their firms' accounts ahead of customers.

In some instances where, prosecutors said, the traders were cheating customers, they referred to the exchange's electronic order system with an obscenity. Mark Schonfeld, director of the S.E.C.'s Northeast Region office, said the specialists' disregard for their obligations was "profound, and at times profane."

In one case, at 9:41 a.m. on Oct. 2, 2002, the computer of a specialist in General Electric stock indicated that at a price of $25.85, there were orders to buy 39,500 shares and orders to sell 35,000 shares. The specialist, David A. Finnerty of Fleet Specialist, should have matched the 35,000, prosecutors say. Instead he bought 22,700 shares for Fleet's own account at $25.85, then raised the price to $25.95. Just after 9:42, he sold 12,800 shares from the same account, making $1,280 in about 14 seconds.

Regulators say he made $4.3 million in illegal profit and caused $5 million in customer harm.

But Mr. Finnerty's lawyer, Frederick P. Hafetz, said of his client: "His conduct was consistent with his obligations to the New York Stock Exchange. He is fully confident that he will be vindicated at trial."

David N. Kelley, the United States attorney in Manhattan, said at a news conference that the specialists put "their own interests and the interests of their firms before the interests of the unwitting investors."

"Over time," Mr. Kelley continued, "these small thefts accumulate into large profits that translate into higher compensation and bonuses for specialists who execute the trades." He added that the investigation was continuing and that other indictments could follow.

If convicted, the accused face prison terms as long as 10 to 20 years and fines of $1 million to $5 million, or twice the gross gain or loss resulting from the improper trades, prosecutors said.

Fourteen traders who were indicted have been arrested (the 15th is thought to be in the Netherlands.) All 14 pleaded not guilty late yesterday.

As part of its settlement with the S.E.C., the stock exchange agreed to finance an outside monitor to conduct audits of its regulatory program every two years through 2011. In addition, it will set up a pilot program of video and audio surveillance on its trading floor for at least 18 months in a group of 20 highly liquid stocks.

The Big Board had instituted a number of measures to curb abuse. In December 2003, it created a chief regulatory officer and formally separated its regulatory arm from the business side. Regulatory management has been almost entirely replaced, and the size of the group has increased markedly. A specialist surveillance unit and a risk assessment unit have been created.

The 15 people indicted yesterday include, in addition to Mr. Finnerty, Donald R. Foley II, Scott G. Hunt and Thomas J. Murphy Jr., all former employees of Fleet Specialist, now part of Bank of America; Frank A. Delaney IV and Kevin M. Fee, former specialists at Bear Wagner; Freddy DeBoer, a former Labranche & Company specialist; Robert A. Johnson, of Spear, Leeds Kellogg Specialists; and Patrick J. McGagh, Joseph Bongiorno, Michael J. Hayward, Richard P. Volpe, Michael F. Stern, Gerard T. Hayes and Robert A. Scavone, of Van der Moolen Specialists USA.

At the arraignment yesterday, Barry H. Berke, who represents Mr. Bongiorno, called the charges "an unprecedented attempt to transform industrywide issues into a criminal case" against individuals.

The S.E.C.'s case names five other specialists. They include two former Spear Leeds chiefs, Todd Christie and Robert Lucklow. Neither continues to work at Goldman Sachs, which acquired Spear, Leeds in 2000. James Parolisi and Patrick E. Murphy also worked at Spear Leeds.

"Patrick Murphy has long enjoyed a sterling reputation for his skill and his integrity as a specialist at the N.Y.S.E.," Mr. Murphy's lawyer, Robert F. Katzberg, said.

The fifth trader is Warren Turk, who worked at Van der Moolen.

Lawrence Iason, Mr. Turk's lawyer, said, "My client testified before the S.E.C., and in doing so explained he has done nothing wrong and intends to contest the charges."

Robert J Giuffra Jr., a lawyer for Van der Moolen, said, "Van der Moolen specialists continue to cooperate with all government investigations, and the N.Y.S.E. and has taken remedial steps to put these past matters behind the firm."

Representatives of the other firms declined to comment.

In calls to homes of 12 of the 15 former executives, either the executives refused to comment or the calls were not returned. Thomas Murphy, Mr. DeBoer and Mr. Volpe could not be reached.

Eric Dash and Colin Moynihan contributed reporting for this article.

Ny Times

[FaGal]

Justice Department, SEC File Charges Against NYSE Specialists

Tom Hays
The Associated Press
04-13-2005

Fifteen specialists who managed trades on the floor of the New York Stock Exchange were indicted Tuesday, charged with using their inside positions to earn an estimated $20 million in illicit profits for themselves and their firms.

The Securities and Exchange Commission also filed civil charges against 20 specialists, including the 15 charged in the criminal indictment, and the NYSE as well.

The defendants cheated the market "by putting their own interests and the interests of their firms before the interests of the unwitting investors," U.S. Attorney David Kelley told a Manhattan news conference.

Federal authorities said that between 1999 and mid-2003, specialists at five firms put their firms' orders ahead of customers' orders, causing those customers to get inferior prices.

"Over time, these small thefts accumulate into large profits that translate into higher compensation and bonuses for specialists who execute the trades," Kelley said.

Specialists run the open-outcry auctions on the floor of the NYSE and keep trading orderly. They match buy and sell orders for customers of the stocks they oversee and use their firm's money to buy shares when nobody else wants to buy and to sell shares from their own inventory when nobody else wants to sell.

The defendants were awaiting arraignment in federal court in Manhattan on multiple securities fraud charges. If convicted, they face up to 20 years in prison and fines of up to $5 million.

In addition to the federal indictment and civil charges, the NYSE's regulatory enforcement arm announced charges against 17 former specialists, including those indicted, in connection with the case.

Last year, NYSE specialist firms paid a total of $247 million to settle the same allegations brought by the SEC.

The firms' profits come from fees on each transaction as well as their own stock trading. Critics of the specialist system claim this is an inherent conflict of interest, while the NYSE has noted that the specialist firms gained $155 million in illegal profits over five years, a time when the exchange handled $50 trillion in trades.

Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

[FaGal]

US charges 15 specialists with fraudulent trading
www.boston.com - By Associated Press - April 13, 2005


NEW YORK - Fifteen specialists who managed trades on the floor of the New York Stock Exchange used their inside positions to earn an estimated $20 million in illicit gains for themselves and their firms, federal authorities charged yesterday.

The Securities and Exchange Commission also filed civil charges against 20 specialists, including the 15 charged in the criminal indictment, and the NYSE as well.

Federal authorities said that between 1999 and mid-2003, specialists at five firms put their companies' orders ahead of customers' orders, causing those customers to get inferior prices -- a scheme the NYSE's internal regulators failed to catch.

Four of the 15 people indicted worked for Fleet Specialist, a unit of Bank of America Corp. Two work for Bear Wagner Specialists, a unit of Bear Stearns Cos., though they now work on the firm's proprietary trading desk. Seven worked for Van der Moolen Specialists USA, a unit of Van der Moolen Holdings NV. One worked for LaBranche & Co. Inc., while another worked for the Spear, Leeds & Kellogg subsidiary of Goldman Sachs Group.

Specialists run the auctions on the floor of the NYSE, matching buy and sell orders for customers of stocks they oversee. They also use their firms' money to buy shares when nobody wants to buy and to sell shares from their inventory when nobody wants to sell.

Four pleaded not guilty to fraud charges in federal court in Manhattan and were released on bail, and 10 more were awaiting arraignment. The 15th was believed to be in Europe.

[FaGal]

NYSE bars former specialist David Finnerty
www.nynewsday.com - By GASTON F. CERON - Dow Jones Newswires - April 13, 2005


NEW YORK (Dow Jones/AP) - A day after being indicted on charges of abusive trading at the New York Stock Exchange, former "specialist" David Finnerty was censured and barred by the Big Board for failing to provide additional testimony requested by the exchange, as part of its probe into the conduct of specialist floor traders.

Finnerty, formerly the specialist on stocks such as General Electric Co., was among the 15 former Big Board traders that were charged on Tuesday with fraudulent trading by the U.S. Attorney for the Southern District of New York, David Kelley. Finnerty pleaded not guilty.

The NYSE and the Securities and Exchange Commission filed their own civil charges against Finnerty and other former specialists, with the exchange alleging that they committed securities-fraud violations.

Finnerty stopped working as a floor broker at the exchange in 2003.

The NYSE is barring Finnerty from returning for allegedly refusing to sit down for an on-the-record interview with exchange regulators last year. The NYSE said Finnerty had previously been interviewed by the exchange, but NYSE enforcement officials asked him to provide further information.

According to the NYSE, Finnerty's lawyer said he "remains interested in cooperating with your investigation, however, under the circumstances, we believe a further adjournment is in everyone's best interest."

On Tuesday, when Finnerty pleaded not guilty to the U.S. attorney's charges, the lawyer, Frederick Hafetz, said his client "has done nothing wrong."

Finnerty's conduct, Hafetz said, "was consistent with his obligation to the New York Stock Exchange. He is fully confident that he will be vindicated at trial."

His bar from the NYSE, which was imposed by an exchange disciplinary panel, will become permanent if he doesn't comply within 60 days of the panel's decision becoming final, the Big Board said.

Finnerty was a specialist at Fleet Specialist, which now is known as Banc of America Specialist and is a unit of Bank of America Corp.

[FaGal]

Specialists stumble
www.economist.com - April 14, 2005

Charges against its middlemen roil the Big Board


Lots of money can be made in the tiny gaps between the buying and selling prices of shares. But the “specialists” on the New York Stock Exchange (NYSE), who match buy and sell orders, walk a fine line between their duty to their customers and that to their employers. Too fine, it seems. This week federal prosecutors in America charged 15 specialists with making $19m for their firms from improper trading. At the same time the Securities and Exchange Commission (SEC) settled civil charges against the NYSE for poor oversight of its floor, where most trades are still done.

The SEC also brought civil charges against 20 specialists (including those criminally charged) for “pervasive” fraudulent trading between 1999 and 2003. The reason, says the commission, was that the specialists traded for their own accounts when they should have been filling customers' orders first. (Specialists are allowed under certain circumstances to buy and sell stocks for their firm; this helps keep the market moving if liquidity is low.) For example, when a buy order comes in at a higher price than a sell order, the specialist's duty is to match the customers rather than profit from the spread. The SEC says that some such practices went awry—and also that the specialists sometimes abused their positions by trading in advance of customer orders.

The specialist firms—which include elite names such as Bear Wagner and Spear, Leeds & Kellogg (a Goldman Sachs subsidiary)—have been braced for this blow. Last year the companies settled with the SEC for over $240m. One of them, a Dutch firm called Van der Moolen, has seven ex-traders facing charges this week.

For the NYSE, it is another black mark for its efforts at self-regulation, though its standards have been toughened since 2003. The exchange got into trouble with the SEC in 1999, when it was charged with failing to stop illegal trading schemes perpetrated by groups of floor brokers. As part of this week's settlement, in which the Big Board, as in 1999, neither admitted nor denied charges, the NYSE is due to pay $20m to buttress supervision of its regulatory system. It must also begin pilot video and audio surveillance of floor trading of certain highly liquid stocks.

This week's charges may hasten the exchange's switch away from the floor. “Electronic trading systems are much less scandal-prone,” says Benn Steil of the Council on Foreign Relations. The NYSE already plans to become more electronic—and, says Mr Steil, if John Thain, the chief executive, and Marshall Carter, just appointed as chairman, want to get serious about an initial public offering, the trading floor might just have to go altogether. Specialists would rue that day, but would have only themselves to blame.

[FaGal]

QUEENS BROKER IN KING-SIZED SCAM
www.nypost.com - by RICHARD WILNER - April 17, 2005