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Nasdaq Case Resolution?

July 10, 1998|Bloomberg News

The Securities and Exchange Commission is preparing civil charges against three dozen or so brokerages and 100 stock traders following the landmark probe of trading practices in the Nasdaq market before 1994, according to people familiar with the situation.

The SEC began informing firms three weeks ago of their share of fines and individual trader suspensions in a proposed industrywide settlement. Targeted firms include Merrill Lynch, Morgan Stanley Dean Witter, PaineWebber and Troster Singer. An industry settlement would preclude filing charges.

The firms, which would be spared the costly charge of "failure to supervise traders," have 30 days to respond to the SEC's proposal, according to one source. If they choose to fight individually, they would receive a written warning of planned charges.

The case stems from allegations in 1994 that Nasdaq market makers fattened profits by keeping the bid-asked spread on stocks artificially wide. That brought inquiries by the Justice Department and the SEC, which asked securities firms to hand over tapes of incriminating conversations between market makers.

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