Justice Department Probes NYSE Specialists

As many as 20 individual specialists on the floor of the New York Stock Exchange are under investigation by the Justice Department for allegedly using illegal trading practices to cheat customers, a source close to the case confirmed Monday.

The probe, first reported by the New York Times, is an extension of a Securities and Exchange Commission investigation into the trading practices of specialists from 1999 through 2003, the source said on condition of anonymity.

The NYSE began investigating the specialists -- the auctioneers who manage buying and selling of particular stocks -- in 2002, and the SEC got involved after determining that the Big Board was not being aggressive enough.

In March 2004, five specialist firms agreed to a $241-million-plus settlement with regulators to resolve illegal trading allegations, without admitting or denying wrongdoing.

The current investigations focus on 10 to 20 individuals, the source told Associated Press. The individuals were already known to regulators.