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Schwab Faces SEC Action on Spreads

August 12, 1998| Bloomberg News

Charles Schwab Corp., the largest U.S. discount broker, faces possible Securities and Exchange Commission charges stemming from alleged price-fixing of Nasdaq securities, the firm disclosed. SEC staff is recommending that the agency take action against numerous Nasdaq brokerages and individuals, including Schwab's Mayer & Schweitzer wholesale unit and people associated with it, Schwab said in its quarterly 10-Q statement filed with the SEC. The San Francisco-based company is in talks with the SEC to settle the matter and expects a resolution before year-end, a Schwab spokesman said. People familiar with the situation said last month that the SEC was preparing charges against about 100 stock traders and three dozen firms, including Merrill Lynch & Co., Morgan Stanley, Dean Witter, Discover & Co. and PaineWebber Inc. A proposed industrywide settlement could involve large fines and suspensions of individual traders, they said. The SEC accuses Schwab and other firms of cooperating to boost profits by keeping spreads--the difference between bid and offer prices on stocks--artificially wide. Schwab shares fell 63 cents to close at $35.44 on the New York Stock Exchange.

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