NYSE Fines FleetBoston for Improprieties

The New York Stock Exchange fined FleetBoston Financial Corp. $150,000 for allegedly mishandling customer orders, just days before the trading unit suspended a specialist in connection with a probe of potentially illegal practices, regulatory documents show.

The fine stems from April 10 citations against a trading specialist at FleetBoston’s Fleet Specialist subsidiary for allegedly violating both federal and exchange regulations, according to documents provided by the NYSE on Monday.

Among the wrongdoings, the NYSE said the specialist neglected his primary duty of maintaining an orderly market by failing to publish the price and size of a customer order and failing to trade the stock. The documents also allege that the specialist stepped in and traded when he shouldn’t have. The action was first reported Monday by the Wall Street Journal.

Positioned at trading posts on the NYSE floor, specialists match stock buyers with sellers and keep trading running smoothly by publishing what’s known as an order book, which displays prices at which investors are willing to buy and sell.

The NYSE would not say whether the allegations boil down to a practice called front-running, in which the specialist steps ahead of his client to make a trade for the benefit of himself or his firm based on knowledge of that impending order.

And the exchange declined to comment on whether the fine it levied against Fleet Specialist was connected to a broader probe at several firms, which it disclosed last week.

Neither Fleet Specialist nor the NYSE would say if the unidentified specialist referred to in the April 10 filing was the same individual that Fleet Specialist suspended for improperly handling of trading of General Electric Co.