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NYSE to Shift Stock of Some Market Makers

February 23, 1988|From Reuters

NEW YORK — The New York Stock Exchange said Monday that it would reassign the stock of E. F. Hutton Group Inc., A. G. Edwards Inc. and Neiman-Marcus Group Inc., amid questions about the behavior of the market makers in those shares during the October crash.

The NYSE said it had been reviewing the performance on Oct. 20 of LaBranche & Co., a specialist in the stocks of Edwards and Hutton, which is soon to be merged with Shearson Lehman Bros. Holding Inc. and taken off the Big Board.

It said that LaBranche, after discussions with exchange officials, agreed voluntarily to withdraw as a specialist in both Edwards and Hutton shares.

The exchange is looking into the behavior during the crash of some of its specialists, who are obligated to keep an orderly market in their securities and serve as buyers of last resort.

Many of the specialists have been blamed for selling into the crash or otherwise failing to keep an orderly market. In several instances, the companies whose stock was being traded have been concerned by the wide gaps between the Oct. 19 closing price and the Oct. 20 opening price of their shares.

In a separate statement, the NYSE said Monday that it also would reallocate the stock of Neiman-Marcus to another specialist after reviewing the performance on Oct. 20 of specialist Lawrence O'Donnell & Co.

Previously the biggest NYSE specialist, Spear, Leeds & Kellogg, resigned as a market maker in J. P. Morgan & Co.'s stock. The market maker in Morgan stock now is Henderson Bros.

Last month, M. J. Meehan & Co. withdrew as a market maker for Gould Inc. amid questions about its trading practices, and the NYSE said other specialists could lose their market making privileges as a result of the exchange's continuing investigation.

NYSE officials said the exchange's allocation committee would assign specialists for Hutton and Edwards shares at a meeting on March 3.

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