Securities News

Distributions Begin To Victims Of Improper Trading At NYSE Specialist Firms

Washington, D.C., - The Securities and Exchange Commission announced that starting today the fund administrator will begin making distributions to compensate customers who were injured by the unlawful proprietary trading conducted by seven New York Stock Exchange specialist firms. The distribution funds include approximately $247 million in disgorgement and civil monetary penalties paid by the firms to settle charges of unlawful proprietary trading brought by the SEC. The first distribution includes payments totaling approximately $52 million.

"Today's distribution exemplifies the SEC's continuing commitment to investor restitution," said SEC Chairman Christopher Cox. "The substantial monetary remedies imposed in this case will compensate injured customers as well as deter future misconduct. It will also remind investors that the SEC continues to keep a close eye on market participants to ensure that markets function properly."

On March 30, 2004, and July 26, 2004, the SEC brought settled administrative proceedings against Bear Wagner Specialists LLC, Fleet Specialist, Inc. (now Banc of America Specialist, Inc.), LaBranche & Co. LLC, Spear, Leeds & Kellogg Specialists LLC, Van der Moolen Specialists USA, LLC, Performance Specialist Group LLC, and SIG Specialists, Inc. Pursuant to the settlement orders, the firms paid over $247 million to compensate injured customers.

The settlement funds were deposited into seven Fair Funds that are being administered by a single fund administrator, and will be distributed pursuant to a distribution plan drawn up by the fund administrator. The fund administrator's distribution plan was approved by the SEC on May 17, 2006, and subsequently modified on July 5, 2006. By distributing the money under a single distribution plan, administrative costs are substantially reduced.

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	Did You Know?
	Swap: In general, the exchange of one asset or liability for a similar asset or liability Swap: In general, the exchange of one asset or liability for a similar asset or liability for the purpose of lengthening or shortening maturities, or raising or lowering coupon rates, to maximize revenue or minimize financing costs. This may entail selling one securities issue and buying another in foreign currency; it may entail buying a currency on the spot market and simultaneously selling it forward. Swaps also may involve exchanging income flows; for example, exchanging the fixed rate coupon stream of a bond for a variable rate payment stream, or vice versa, while not swapping the principal component of the bond. Swaps are generally traded over-the-counter.