Two
New York Stock Exchange (NYSE) specialist firms have agreed
to pay $.5.2 m in fines and disgorgement for illegally trading
stock, closing out an investigation that implicated all
seven NYSE specialist firms in improper trading. The two
firms SIG Specialists and Performance Specialist Group were
found to have to put their own companies’ trades ahead of
those of other traders, according to the exchange and the
Securities and Exchange Commission (SEC).
The
NYSE’s seven specialist firms manage the stock auctions
on the floor of the exchange, bringing buyers and sellers
together. When supply does not meet demand, the specialist
steps in to buy or sell stock in order to keep the market
balanced. The two firms, and five others that settled with
the SEC and NYSE in March, admitted to buying or selling
stock even when there were other buyers and sellers present.
By putting their trades ahead of others, the firms made
money at the expenses of others, abusing their role as specialists,
the NYSE and SEC said making US $ 3.5 million in illegal
profits from 1999 through 2003.
