graphic
Markets & Stocks
Brokers settle price fixing
December 24, 1997: 3:10 p.m. ET

Over 30 securities firms to pay more than $1 billion in 1994 collusion case
graphic
graphic graphic
graphic
NEW YORK (CNNfn) - More than 30 top securities firms have agreed to pay more than $1 billion to settle a highly publicized lawsuit alleging that Wall Street colluded to illegally determine prices of more than 1,000 Nasdaq stocks.
     The latest proposed settlement is expected to total $910 million including interest payments, with distribution set to begin in 1999, according to Geoffrey Horn, attorney with Lovell & Stewart. The Manhattan law firm served as outside counsel for certain plaintiffs in the case.
     With the latest plan, the total amount of the settlement has reached over $1 billion. Several firms -- including Montgomery Securities, Jefferies & Co. and Sherwood Securities -- already have negotiated individual settlements paying more than $100 million.
     The suit was originally filed in 1994 in U.S. District Court in Manhattan alleging the market makers conspired between 1989 and 1994 to keep a stock's "bid" and "offer" as far apart as possible, choosing instead not to honor a customer's order made within that so-called "spread."
     The proposed settlement still must be approved by federal judge Robert W. Sweet.
     Plaintiffs ranged from "mom and pop" investors to huge mutual fund companies. Attorneys for investors must decide how much each investor should get.
     Among the firms included in Wednesday's settlement are: A.G. Edwards; Bear Stearns; BT Alex Brown; CIBC Oppenheimer; Cowen & Co.; Credit Suisse First Boston; Dean Witter Reynolds; Donaldson Lufkin & Jenrette; Everen Securities; Furman Selz; Goldman Sachs; Hambrecht & Quist; J.C. Bradford; J.P. Morgan; Legg Mason; Lehman Brothers; Mayer & Schweitzer; Merrill Lynch; Nash Weiss; Olde Discount; PaineWebber; Piper Jaffray; Prudential Securities; Robinson Humphrey; Salomon Brothers; Smith Barney; Troster Singer; UBS Securities; and Weeden & Co.
     The lawsuit was a companion to a Justice Department antitrust case that accused firms of fixing prices on the Nasdaq. That suit was settled in July 1996 with two dozen Wall Street firms agreeing to install expensive monitoring systems to ensure that brokers aren't stifling competition or padding trading profits.
     Meanwhile, Charles Schwab said in a separate statement that it agreed to pay $46 million pretax, or $27 million after tax, to settle the class action lawsuit involving its Mayer & Schweitzer unit.
     Schwab expects to report fourth-quarter net income of $60 million to $66 million, or 22 cents to 24 cents a share, reflecting charges related to the price-fixing lawsuit.
     Schwab, which said it does not expect further charges from the suit, added its fourth-quarter earnings (excluding the charges) would equal $77 million to $83 million, or 28 cents to 30 cents a share. Revenue is expected to total about $620 million.
     In the fourth quarter of 1996, Schwab earned $59.7 million, or 22 cents a share, on revenue of $482.3 million.
     Under the terms of the settlement, three percent of the amount will be paid in December and the rest is due in September.
     Schwab expects to report results in mid-January.
     Under the terms of the settlement, none of the firms involved acknowledged any wrongdoing.Back to top
     -- from staff and wire reports

  RELATED STORIES

Nasdaq firms may settle? - Dec. 19, 1997

SEC widens small-cap probe - Dec. 18, 1997

  RELATED SITES

Justice Department

Securities and Exchange Commission


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.