SEC Fines Brokerages, Traders in Nasdaq Probe

The Securities and Exchange Commission imposed $27.1 million in penalties on 28 brokerages and 51 traders Monday in a settlement that ends a federal investigation of trading abuses on the Nasdaq Stock Market.

Almost all the firms were charged with manipulating the market for at least one security by collaborating on Nasdaq quotes in 1994. The SEC alleged that many brokerages also failed to honor posted quotes, failed to report trades in a timely fashion, failed to get the best prices on customer orders, and failed to properly supervise brokers.

The firms agreed to refund $792,000 in improper gains, the SEC said.

The largest penalties were imposed on PaineWebber Group Inc., which agreed to pay $6.3 million in fines and $381,625 in refunds, and UBS’ Warburg Dillon Read, which is to pay $3.5 million in fines and $64,416 in refunds.

“All the firms had significant problems with regard to their over-the-counter trading activities,” said SEC Associate Enforcement Director Paul V. Gerlach. “We definitely believe that there have been significant improvements since.”