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News and Press Releases |
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HEADLINE ARCHIVED:
N.Y.S.E. CHIEF SUGGESTS FUND TO COVER LOSSES
By: Landon Thomas Jr.
The New York Times, November 12, 2003
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EXCERPT: John S. Reed, the interim chairman of the New York Stock Exchange, proposed yesterday that the exchange set up a fund to compensate investors for any losses they may have suffered because of trading violations by the exchange's specialist traders, a senior executive at a specialist firm said. The suggestion came in a meeting Mr. Reed and two senior exchange officials had yesterday with top executives of the specialist firms. The meeting was held to help address what has become a widening impasse between the specialist firms, which maintain orderly markets in individual stocks, and the exchange's regulatory division over how much the specialists must pay in penalties to settle a long-running investigation into their practices. The specialist firms under investigation are LaBranche & Company; Fleet Specialist, a unit of FleetBoston; Bear Wagner Specialists; Spear, Leeds & Kellogg, owned by Goldman Sachs; and Van der Moolen Specialists. According to the senior executive, Mr. Reed mentioned $150 million as a starting point for negotiations for the fund, which would be financed by the specialists. Specialist firms have disputed this figure, contending that they were informed in September by exchange officials that their fines would probably range from $2 million to $5 million each. After the involvement of the Securities and Exchange Commission, stock exchange regulators said that some firms might have to pay as much as $43 million each. As part of its investigation, the commission determined that losses to customers may have been as much as $150 million, according to an unpublished report by the agency. Mr. Reed said in the meeting that he had yet to brief the S.E.C. on his proposal.
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