Eleven Further Individuals Charged In Connection With Squawk Box Fraud

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

24 March 2006

The US Securities and Exchange Commission on Tuesday charged a former Merrill Lynch broker and ten former day traders and managers from AB Watley, Inc, a broker-dealer, with participating in a fraudulent scheme that used squawk boxes to obtain the confidential institutional customer order flow of major brokerages, such as Citigroup, Lehman Brothers, and Merrill Lynch.

"Squawk boxes" are devices that broadcast, within a securities firm, institutional orders to buy and sell large blocks of securities. This broadcast information was used by traders to "trade ahead" of these large institutional orders. In a separate action in August 2005, the Commission charged five individuals as part of this scheme.

Linda Chatman Thomsen, Director of the Commission's Division of Enforcement, explained that:

"This fraud stretched from the biggest firms on Wall Street to a small day-trading shop. The common denominator was a willingness to steal confidential market information for use in illegal trading."

The SEC revealed that it has this week charged the following defendants:

• Paul F. Coughlin, age 34, is a resident of New York, N.Y. Coughlin was a broker at Merrill Lynch in New York City.
• William B. Deakins, age 37, is a resident of Dobbs Ferry, N.Y. Deakins was a proprietary trader at Watley and also was a manager of Watley's proprietary trading desk.
• Warren R. Fellus, age 34, is a resident of Roslyn, N.Y. Fellus was a proprietary trader at Watley.
• Keith M. Geller, age 31, is a resident of New York, N.Y. Geller was a proprietary trader at Watley.
• Kevin H. Leonard, age 45, is a resident of Montvale, N.J. Leonard was a manager of the proprietary trading desk at Watley.
• Robert F. Malin, age 41, is a resident of New York, N.Y. Robert Malin served as President of Watley as well as Vice Chairman of the Board of Directors at Watley Group.
• Steven E. Malin, age 49, is a resident of New York, N.Y. Steven Malin was the Chairman of the Board of Directors at Watley Group.
• Linus N. Nwaigwe, age 49, is a resident of Valley Stream, N.Y. Nwaigwe was director of compliance at Watley.
• Michael A. Picone, age 50, is a resident of New York, N.Y. Picone was the Chief Operating Officer of Watley Group and also worked as a consultant to Watley Group.
• Bryan S. Rogers, age 35, is a resident of East Meadow, N.Y. Bryan Rogers was a proprietary trader at Watley.
• Keith A. Rogers, age 32, is a resident of Franklin Square, N.Y. Keith Rogers was a proprietary trader at Watley.

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