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News
Former broker sues NYSE
December 14, 1999: 9:34 p.m. ET

Suit accuses officers of lying to federal investigators, seeks $22.5 million
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NEW YORK (CNNfn) - A former floor broker has sued the New York Stock Exchange, accusing the exchange and its officers of conspiring to violate federal securities laws.
    The lawsuit, filed Tuesday in the New York County Supreme Court by John D’Alessio, accuses the exchange of encouraging hundreds of floor brokers to trade illegally by sharing their profits in flip trades with customers.
    Flip trading is a term used to describe the practice of buying shares of a stock and then selling them immediately for a quick profit.
    In the lawsuit, D’Alessio, who says he had entered into such a profit-sharing arrangement with one of his clients, the Oakford Corp., acknowledges that the practice is illegal because they confer upon the broker an interest in the account for which they are trading.
    However, the lawsuit alleges that the NYSE not only sanctioned the practice but also encouraged it because it was profitable for the exchange since floor brokers were required to pay as a fee a percentage of the commissions they were paid by their customers.
    D’Alessio, who is seeking $22.25 million in damages, is suing for injurious falsehood, willful and negligent misrepresentation and breach of contract.
    D’Alessio, who was one of several NYSE floor brokers arrested in 1998 on criminal charges that he knowingly traded on the exchange floor for his own account, claims that the exchange’s officers concealed their approval of his profit-sharing arrangement from investigators because they feared that they would be indicted had they revealed it.
    The charges against D’Alessio were dismissed in May 1999 after the government learned that the NYSE had indeed taken the position that floor brokers could share profits with customers, the complaint says.
    Of the 11 floor brokers arrested by the government, D’Alessio is the only one who did not enter into a plea agreement or was not convicted.
    D’Alessio claims he lost $1 million selling his stock exchange seat, as well as an additional $1 million in income and $250,000 in legal fees, after he was arrested.
    A NYSE spokesman had no comment on the suit Tuesday, saying, "we do not comment on pending litigation.” Back to top





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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.