Reply #4: Naming Names - NYSE Specialists Indicted for Fraud, Improper Trading [View All]

[UpInArms]

NYSE Specialists Indicted for Fraud, Improper Trading (Update8)

http://www.bloomberg.com/apps/news?pid=10000087&refer=top_world_news&sid=aJxtzBxBD5IY

excerpt:

As a specialist with Fleet Specialist Inc., David Finnerty, 38, handled NYSE trading of General Electric Co. shares.

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Seven of the 15 specialists charged worked at Van der Moolen. Five, Joseph Bongiorno, 50; Michael Hayward, 51; Michael Stern, 54, Richard Volpe, 45; and Robert Scavone, 45, had supervisory roles at the exchange. Bongiorno was among the 20 senior NYSE officials known as floor governors.

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The remaining two former Van der Moolen specialists charged are Patrick McGagh, 39, and Gerard Hayes, 44. Together, the seven conspired to break securities laws and their actions cost customers at least $5.9 million, according to the indictments.

In addition to Finnerty, Fleet employed three of the indicted specialists: Thomas Murphy Jr., 41; Scott Hunt, 36; and Donald Foley, 44. The remaining four specialists charged are Robert Johnson, 40, of Spear Leeds; Kevin Fee, 37, and Frank Delaney, 42, of Bear Wager; and Freddy DeBoer, 43 of LaBranche.

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The SEC's suit names the same 15 specialists, as well as five more not criminally charged. The five include Todd Christie, 40, and Robert Luckow, 57, both former CEOs of Spear Leeds, the specialist firm that Goldman acquired for more than $6.1 billion in 2000.

``Mr. Luckow does not believe he did anything wrong,'' said Richard Morvillo, a lawyer representing him in the SEC suit. Paul Shechtman, a lawyer representing Christie, didn't immediately reply to calls seeking comment.

Two more, James Parolisi, 42, and Patrick Murphy, 45, also worked at Spear Leeds. The third, Warren Turk, 36, worked at Van der Moolen.

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The two remaining NYSE specialist firms, both of which aren't mentioned by name in the indictments or the SEC suit, are SIG Specialists Inc. and Performance Specialist Group.

The Big Board itself is a repeat offender. The SEC rebuked the exchange in 1999 for failing to properly oversee its floor trading. The following year, SEC inspectors visited the floor and found lingering deficiencies in surveillance, according to a 2001 agency report.

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