Post by jannikki on Jul 15, 2006 19:25:18 GMT -4
2-Two former NYSE traders found guilty of fraud
Fri Jul 14, 2006 7:54pm ET
By Christine Kearney and Megan Davies
NEW YORK, July 14 (Reuters) - A jury on Friday found two former New York Stock Exchange (NYSE) traders guilty of securities fraud, and each faces a maximum of 20 years in prison.
Michael Hayward, 53, and Michael Stern, 55, were each found guilty in Manhattan federal court of one count of securities fraud, but were acquitted of three other counts.
The verdict is the latest blow to floor trading on the NYSE, already under threat from speedy electronic rivals as well as the NYSE's own moves to expand into electronic trading.
The two traders were specialists on the NYSE floor. These are traders who buy and sell stocks and are allowed to trade from their own accounts only to dampen volatility and add liquidity. Some critics of the system have argued that the open-outcry specialist trading model is old-fashioned and that electronic dealing is more efficient.
Hayward and Stern were indicted in April 2005 with 13 others for their role in schemes -- known as inter-positioning and trading ahead -- that federal prosecutors said cost investors $19 million.
Both previously worked at Van der Moolen Specialists USA LLC, whose parent is Amsterdam-based Van der Moolen Holding NV (VDMN.AS: Quote, Profile, Research). They are the first of the group of 15 to go on trial, though two others pleaded guilty in May.
Prosecutors argued during the trial that the pair intentionally engaged in thousands of improper trades that lined their own pockets and cost investors millions of dollars. In closing arguments at Manhattan Federal Court, Assistant U.S. Attorney Anthony Barkow said Hayward and Stern knowingly made trades that violated securities laws.
They were like crooked dealers in a crooked card game," Barkow said during the trial. "They dealt the best cards to themselves."
Government prosecutors contended that they knowingly broke the "golden rule" of the NYSE, which is to always put the customer first and match trades between public buyers and sellers before trading the firm's own accounts.
According to the indictment, from 1999 through April 2003 the 15 floor traders violated NYSE rules by trading ahead of investor orders. They also inserted themselves in trades in which a buyer and seller should have been matched.
Hayward was convicted of one count of securities fraud relating to trading in stock of U.S. energy company Apache Corp. (APA.N: Quote, Profile, Research) during the period March 2002 - April 2003.
Stern was convicted of one count of securities fraud relating to trading in stock of Duke Energy Corp. (DUK.N: Quote, Profile, Research) during the period October 2002 - April 2003.
Sentencing was set for Oct. 27.
After the verdict was read, Hayward patted his lawyer on the back and Stern embraced his lawyer.
U.S. District Judge Sidney Stein said the defendants would remain free on bail.
yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060714:MTFH50104_2006-07-14_23-54-38_N14183485&type=comktNews&rpc=44
Fri Jul 14, 2006 7:54pm ET
By Christine Kearney and Megan Davies
NEW YORK, July 14 (Reuters) - A jury on Friday found two former New York Stock Exchange (NYSE) traders guilty of securities fraud, and each faces a maximum of 20 years in prison.
Michael Hayward, 53, and Michael Stern, 55, were each found guilty in Manhattan federal court of one count of securities fraud, but were acquitted of three other counts.
The verdict is the latest blow to floor trading on the NYSE, already under threat from speedy electronic rivals as well as the NYSE's own moves to expand into electronic trading.
The two traders were specialists on the NYSE floor. These are traders who buy and sell stocks and are allowed to trade from their own accounts only to dampen volatility and add liquidity. Some critics of the system have argued that the open-outcry specialist trading model is old-fashioned and that electronic dealing is more efficient.
Hayward and Stern were indicted in April 2005 with 13 others for their role in schemes -- known as inter-positioning and trading ahead -- that federal prosecutors said cost investors $19 million.
Both previously worked at Van der Moolen Specialists USA LLC, whose parent is Amsterdam-based Van der Moolen Holding NV (VDMN.AS: Quote, Profile, Research). They are the first of the group of 15 to go on trial, though two others pleaded guilty in May.
Prosecutors argued during the trial that the pair intentionally engaged in thousands of improper trades that lined their own pockets and cost investors millions of dollars. In closing arguments at Manhattan Federal Court, Assistant U.S. Attorney Anthony Barkow said Hayward and Stern knowingly made trades that violated securities laws.
They were like crooked dealers in a crooked card game," Barkow said during the trial. "They dealt the best cards to themselves."
Government prosecutors contended that they knowingly broke the "golden rule" of the NYSE, which is to always put the customer first and match trades between public buyers and sellers before trading the firm's own accounts.
According to the indictment, from 1999 through April 2003 the 15 floor traders violated NYSE rules by trading ahead of investor orders. They also inserted themselves in trades in which a buyer and seller should have been matched.
Hayward was convicted of one count of securities fraud relating to trading in stock of U.S. energy company Apache Corp. (APA.N: Quote, Profile, Research) during the period March 2002 - April 2003.
Stern was convicted of one count of securities fraud relating to trading in stock of Duke Energy Corp. (DUK.N: Quote, Profile, Research) during the period October 2002 - April 2003.
Sentencing was set for Oct. 27.
After the verdict was read, Hayward patted his lawyer on the back and Stern embraced his lawyer.
U.S. District Judge Sidney Stein said the defendants would remain free on bail.
yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060714:MTFH50104_2006-07-14_23-54-38_N14183485&type=comktNews&rpc=44