Brokerages Settle in SEC Investigation
About two dozen brokerages, including many of Wall Street’s biggest firms, will agree to pay millions of dollars in fines under a settlement with regulators that will conclude the federal investigation of trading abuses on the Nasdaq Stock Market, people with knowledge of the talks said Wednesday.
The settlement between the U.S. Securities and Exchange Commission and the firms--including Merrill Lynch, Morgan Stanley Dean Witter and Citigroup’s Salomon Smith Barney unit--is expected to be announced within a week. The SEC will also charge about 50 individual traders at these firms and will seek to suspend many of them, the sources said.
The commission’s charges against the brokerages stem from practices by traders on Nasdaq during the early 1990s, including failure to honor posted quotes, failure to execute trades at the best prices for customers and failure to report trades in a timely fashion, the sources said.
The SEC investigation grew out of allegations that also led to a 1996 settlement of Justice Department price-fixing charges by a group of brokerages and to a 1996 SEC censure of the Nasdaq Stock Market. More than three dozen brokerages also agreed to pay more than $1 billion to settle a private class-action suit alleging that traders colluded on pricing of Nasdaq stocks.
