60 Options Investors to Settle Losses From Black Monday

Nearly 2 1/2 years after the stock market collapse of 1987, creditors of a failed brokerage firm have reached a settlement with former options investors who lost $12.4 million on Black Monday.

The 60 investors, enrolled in a high-risk options trading program with H. B. Shaine & Co. at the time of the Oct. 19, 1987, crash, will pay $3.4 million--or an average of about $57,000 each--of the $12.4 million worth of trading losses they piled up. The settlement was approved Monday by U.S. Bankruptcy Judge Laurence Howard.

Shaine, a locally based retail brokerage firm, was ordered liquidated by a federal judge on Oct. 20, one day after Wall Street’s record collapse. It was taken over by Securities Investors Protection Corp., a federal agency that insures brokerage accounts.

The remaining losses owed to creditors will be absorbed by the brokerage’s large creditors or paid by its owners and directors.

The largest single creditor is Options Clearing Corp., the Chicago clearinghouse that handles options transactions. Other creditors include banks that loaned Shaine money.