The New York Times > Business > 15 Specialists From Big Board Are Indicted

The New York Times > Business > 15 Specialists From Big Board Are Indicted:

"The 15 specialists indicted, all but two of whom have left their firms, were members of the New York Stock Exchange's five major specialist trading companies. They are accused of making illegal trading profits from interpositioning of $13.4 million and costing investors more than $19 million from trading for their firms' accounts ahead of customers.

In some instances where, prosecutors said, the traders were cheating customers, they referred to the exchange's electronic order system with an obscenity. Mark Schonfeld, director of the S.E.C.'s Northeast Region office, said the specialists' disregard for their obligations was 'profound, and at times profane.'

In one case, at 9:41 a.m. on Oct. 2, 2002, the computer of a specialist in General Electric stock indicated that at a price of $25.85, there were orders to buy 39,500 shares and orders to sell 35,000 shares. The specialist, David A. Finnerty of Fleet Specialist, should have matched the 35,000, prosecutors say. Instead he bought 22,700 shares for Fleet's own account at $25.85, then raised the price to $25.95. Just after 9:42, he sold 12,800 shares from the same account, making $1,280 in about 14 seconds."