New York Stock Exchange Regulation, which charged 17 specialists with trading violations in 2005, isn’t done yet and could add more names to the list of offenders.
There’s a pecking order to these types of cases, and NYSE Reg is waiting for the Securities and Exchange Commission to finish its administrative proceedings against several former specialists. Once completed, NYSE Reg will then begin its own hearings. The cases stem from the trading ahead and interpositioning scandal of the early part of the decade that resulted in a major black eye for the Big Board and fines of $250 million for five specialist firms.
But as of late, the news has been good for these former floor traders. In July and August, federal judges exonerated six former NYSE specialists charged by the U.S. Department of Justice (DOJ) with securities fraud for their roles in the NYSE floor trading scandal. The judges’ decisions offer hope to several others now facing trial in Securities and Exchange Commission proceedings covering the same charges.
NYSE Reg already settled the cases of six of the 17 ex-traders. It has put the fate of the remaining 11 on hold until the SEC wraps up its cases. For its part, the SEC is working through its caseload now that the cases prosecuted by the DOJ have wrapped up.
Sources say the list of the 11 men charged is likely to grow. NYSE Reg would not comment, but there is precedent. NYSE Reg brought two cases after the original 17 men were charged in 2005. In February 2007, NYSE Reg announced “disciplinary actions” against two former specialists, Myles Gillespie, former president and chief supervisory specialist of Fleet Specialist, now Banc of America Specialists, and Thomas Verdiglione, a specialist with Van der Moolen Specialists USA, for their roles in the scandal. Both men agreed to a settlement with NYSE Reg and are not among the 11 remaining cases.
A NYSE Reg spokesperson could not say when the regulator would begin its hearings, only that it must wait until the SEC is finished. As to what impact the SEC cases could have on the NYSE Reg hearings, the spokesperson would only say: “We reserve the right to consider our options once the SEC cases are finalized.”
