Regulators, Specialists Reach Tentative Agreement

The New York Stock Exchange's five largest "specialist" firms reached a preliminary agreement Tuesday to pay about $240 million to settle a civil case claiming they failed to oversee traders who improperly traded ahead of their customers, The Wall Street Journal reported.

The Journal reported that the deal could still unravel at the 11th hour, but if it stands, it would represent the biggest fine involving Big Board specialists ever. The specialists, or auctioneers who supervise the buying and selling of shares on the Big Board floor, reached the tentative accord with the Securities and Exchange Commission (SEC) and the NYSE’s enforcement arm.

As part of the preliminary agreement, the specialists would pay a total of about $155 million in disgorgement of ill-gotten gains plus penalties of about $85 million, according to a person familiar with the matter.

The firms, which all deny wrongdoing, are: Bear Stearns Cos.' Bear Wagner Specialists; Goldman Sachs Group Inc.’s Spear, Leeds & Kellogg; LaBranche & Co.; Van Der Moolen Holding NV's Van Der Moolen Specialists USA; and FleetBoston Financial Corp.’s Fleet Specialist unit.

The dispute has eroded public trust in the Big Board’s open-outcry system, which has been used for 211 years. The SEC issued a confidential report in October that criticized the NYSE for failing to police its specialists and for overlooking obvious violations that resulted in investors being shortchanged by at least $155 million over three years.

You may like these other stories...

Treasury prepares options to address tax inversionsDamian Paletta of the Wall Street Journal reported on Monday that US Treasury Department officials are assembling a list of administrative options for Treasury Secretary...
Read more from Larry Perry here and in the Today's World of Audits archive.In my previous article, I discussed auditing standards and the impact of the assessed level of risk of material misstatement (RMM) on the design...
While audits of broker-dealers showed some improvement last year compared to previous years, 71 of 90 broker-dealer audits inspected by the Public Company Accounting Oversight Board (PCAOB) in 2013 were still found to have...

Already a member? log in here.

Upcoming CPE Webinars

Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.