Van Der Moolen Specialists

Robert Scavone, a former manager at stock trading firm Van der Moolen Specialists, was acquitted Tuesday of defrauding investors at the New York Stock Exchange in a verdict that was returned in less than an hour. U.S. prosecutors in New York claimed that Scavone earned $190,000 in illegal profit and saved Van der Moolen $330,000 in expenses by trading for the firm's own account ahead of clients.

Robert Scavone, a former manager at stock trading firm Van der Moolen Specialists, was acquitted Tuesday of defrauding investors at the New York Stock Exchange in a verdict that was returned in less than an hour. U.S. prosecutors in New York claimed that Scavone earned $190,000 in illegal profit and saved Van der Moolen $330,000 in expenses by trading for the firm's own account ahead of clients.

The New York Stock Exchange nominated William McDonough, president of the Federal Reserve Bank of New York, to its board as a replacement for Citigroup Inc. Chairman Sanford I. Weill, who withdrew his name from consideration last month amid criticism he was an inappropriate advocate for investors. The NYSE also nominated its former vice chairman, Robert Fagenson, now vice chairman of Van der Moolen Specialists USA.

The New York Stock Exchange named BlackRock Inc. Chairman Laurence Fink, who headed the committee that chose John Reed as interim chairman, to lead a nine-person group that will pick a permanent successor to Richard Grasso. The panel, which intends to hire an executive search firm, also will decide whether to split the posts of chairman and chief executive, both of which were held by Grasso, Fink said. The other committee members are former Secretary of State Madeleine K.

The Securities and Exchange Commission on Monday said it reached a $5.2-million settlement with SIG Specialists Inc. and Performance Specialist Group, two market makers on the New York Stock Exchange. The firms settled SEC allegations that they traded ahead of customers between 1999 and 2003, the agency said.

The New York Stock Exchange on Wednesday censured a former trader at Van der Moolen Specialists USA, the first punishment of a market-maker in its probe into the exchange's auctioneers. Michael F. Stern, 54, was also permanently barred from working on the floor or for a NYSE member company for refusing to testify to investigators, the exchange said. Stern's lawyer didn't return a call for comment.

Five New York Stock Exchange specialist firms will pay $242 million to settle charges that they profited from illegal trading practices on the floor of the exchange, the Securities and Exchange Commission and the NYSE said Tuesday. The five firms -- Bear Stearns Cos. subsidiary Bear Wagner Specialists, FleetBoston Financial Corp. subsidiary Fleet Specialist Inc., LaBranche & Co., Van der Moolen Specialists and Goldman Sachs Group Inc.

Former New York Stock Exchange Chairman James Needham called for the resignation of Chairman Richard Grasso and the entire board after directors approved a $140-million payout to Grasso this month. "It's time to clean house," said Needham, 77, a retired accountant who headed the NYSE from 1972 to 1976 and who also served on the Securities and Exchange Commission. "I feel the board just didn't step up to the plate and run that operation properly."

Federal regulators have begun interviewing individual specialists on the floor of the New York Stock Exchange about an investigation of possible illegal trading. As the NYSE awaits the arrival next week of a temporary replacement for its ousted chairman, Richard Grasso, sources close to the Securities and Exchange Commission said the agency's review of the probe is "a very high priority."

The California Public Employees' Retirement System sued the New York Stock Exchange and its seven "specialist" firms Tuesday, alleging that improprieties in the NYSE's tradition-bound trading system have cost U.S. investors more than $150 million over the last three years.

Criticism of New York Stock Exchange Chairman Richard Grasso and his $140-million-plus pay package intensified Friday and included new calls from several NYSE seat holders for his resignation. Traders who work on the Big Board floor launched a petition drive to oust Grasso and other NYSE top brass, according to a trader who spoke on condition of anonymity. The group needs at least 100 signatures from the NYSE's 1,366 seat holders to force a special meeting on Grasso's tenure.