Moolen Manager Acquitted

Robert Scavone, a former manager at stock trading firm Van der Moolen Specialists, was acquitted Tuesday of defrauding investors at the New York Stock Exchange in a verdict that was returned in less than an hour.

U.S. prosecutors in New York claimed that Scavone earned $190,000 in illegal profit and saved Van der Moolen $330,000 in expenses by trading for the firm’s own account ahead of clients.

The trial followed the July 14 convictions of former Van der Moolen managers Michael Stern and Michael Hayward. They were found guilty of defrauding NYSE customers in thousands of trades in 2002 and 2003. Two other traders have pleaded guilty.

Scavone was acquitted shortly after a jury in federal court in Manhattan began deliberations on a single charge of securities fraud. The speed of the verdict calls into question whether the U.S. will win convictions against 10 remaining defendants who are charged with similar crimes.

“I hope the government will think twice before going forward,” Scavone’s attorney, Andrew Schapiro, said after the verdict. “There was no intentional wrongdoing. These trades were instead the natural product of the fast pace of trading on the New York Stock Exchange.”

A spokeswoman for U.S. Atty. Michael Garcia declined to comment.

The cases stem from a two-year federal probe of the NYSE’s so-called market makers, who match buy and sell orders on the exchange floor. Stern and Hayward, the first of 15 traders from seven firms to go to trial, were each acquitted of conspiracy charges and two additional fraud counts.

Van der Moolen, the fourth-largest of the seven “specialist” market-making firms at the NYSE, agreed in 2004 to pay $57.7 million to settle allegations that it profited on trades at the expense of customers from 1999 to 2003. The settlement said Van der Moolen’s trading abuses cost investors $34.9 million.

Six other specialist firms agreed to pay about $189 million to settle similar investigations.