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Brokers penalized $26M
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January 11, 1999: 1:49 p.m. ET
SEC says 28 firms to pay for violations in Nasdaq market-making
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WASHINGTON (CNNfn) - Some of the biggest firms on Wall Street will pay a total of more than $26 million in civil penalties to settle allegations of federal antifraud or other violations related to Nasdaq market-making activities.
The U.S. Securities and Exchange Commission says that among the 28 broker-dealers participating in the settlement are Merrill Lynch (MER), Salomon Smith Barney (CXB), Lehman Brothers (LEH), CS First Boston and Bear Stearns (BSC). Some 51 individuals, all but one of whom work for the firms cited, have been suspended or barred from participation in the securities industry.
The SEC says the settlements of the cases conclude an investigation of the Nasdaq market begun in 1994. "The settlements require the firms to improve their trading policies and procedures, building upon other reforms already implemented," says Richard Walker, director of the SEC's enforcement division.
The SEC says all of the firms and individuals involved in the action settled the cases without admitting or denying the charges.
Among the violations cited by the commission are the coordination of quotations and transactions by traders making markets in Nasdaq stocks in violation of antifraud and fictitious quotation rules, the intentional delay of trade reports, failure to honor quoted prices, and failure to provide customer orders with best execution.
Besides the $26.3 million in civil penalties, the firms named agreed to pay back $791,525 in wrongful gains and were issued cease-and-desist orders. The SEC says 22 of the firms underwent an independent review of their policies and positions regarding the areas in which they committed violations. 
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