NYSE traders indicted on charges of cheating investors - UPDATE 5

Industry News

"Among the stocks in which the alleged fraudulent trading occurred were General Electric, Goldman Sachs, Johnson & Johnson, J.P. Morgan Chase, Nokia, Texas Instruments and Verizon Communication. The Wall Street Journal reported that defense lawyers representing the specialists have argued to investigators that the trading conduct in question was widespread and not illegal.

Prosecutors charged individual specialists at units of Bank of America Corp, Bear Stearns, Goldman Sachs, LaBranche and Van der Moolen. Fourteen of the 15 specialists facing criminal charges surrendered this morning. One is in Netherlands and considered 'at large,' prosecutors said. Named in criminal complaints were former Fleet Specialists' David Finnerty, Donald R. Foley, Scott G. Hunt and Thomas J. Murphy Jr.; and former LaBranche specialist Fred DeBoer. Van der Moolen specialists named in the complaint were Joseph Bongiorno, Michael Hayward, Gerard Hayes, Patrick McCagh, Robert Scavone, Michael Stern and Richard Volpe. Frank A. Delaney and Kevin M. Fee of Bear Wagner Specialists were also named. Of those, five specialists also served as quasi-policemen for the NYSE. Hayward, Scavone, Stern and Volpe were 'floor officials' charged with monitoring the trading activities of floor brokers, who trade for investors, as well as watching other specialists. Bongiorno served in a higher office, floor governor. Prosecutors say some of the defendants not only traded ahead of customers but pushed the price of a security higher or lower to benefit his firm's account."