Brokers Indicted For 'Squawk Box' Abuses

by Glen Shapiro, LawAndTax-News.com, New York

17 August 2005

Four Wall Street brokers were this week indicted by a federal grand jury, accused of allowing day traders to eavesdrop on confidential client orders via the "squawk box" broadcast system utilised by their firms.

Kenneth Mahaffy, Timothy O'Connell (both formerly employed by Merrill Lynch), Ralph Casbarro (formerly of Salomon Smith Barney) and David Ghysels (formerly of Lehman Brothers) reportedly pleaded not guilty to the charges of securities fraud, commercial bribery and conspiracy.

The SEC, meanwhile, has filed a parallel civil case against the four men.

In a statement, the Justice Department's attorney for the Eastern District of New York, Roslynn Mauskopf, argued that:

"The defendants put their own interests ahead of their firms and their firms' clients by stealing valuable, confidential information and selling it to unscrupulous day traders."

The chief executive of the day trading firm at the center of the case, John Amore, has been spared indictment on criminal charges for now, but has been deemed a central part of the conspiracy by the SEC, which is pursuing charges against him.

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