Five specialist New York Stock Exchange (NYSE) firms have reached a settlement agreement with the Securities and Exchange Commission (SEC) over charges that they undertook illegal trading practices on the floor of the exchange.
The five firms - Bear Wagner Specialists, Fleet Specialist Inc., LaBranche & Co., Van der Moolen Specialists, and Spear, Leeds & Kellog - all work to bring buyers and sellers together at a mutually beneficial price, in addition to buying and selling the shares that they manage themselves, in order to help meet supply or demand where necessary.
However, according to the SEC, the firms in question had violated US securities law by executing their own orders ahead of those placed by their clients, thus depriving the latter of the best prices.
Although none of the specialist firms in question have admitted or denied wrongdoing, they have agreed to pay $241.8 million in order to settle the matter.
Of this, $154 million will go to compensate customers disadvantaged by the trading activities, with the remainder representing fines payable to the NYSE and SEC.
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