http://news.yahoo.com/s/nm/20050815/bs_nm/financial_squawkbox_sec_dc Brokers accused in U.S. fraud scheme WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission on Monday charged four brokers and a day trader for scheming to trade ahead of large orders and profiting from the subsequent price movements. The day trader, John Amore, was accused of having paid brokers who had worked at three Wall Street firms to gain live audio access to the firms' so-called "squawk boxes" that broadcast institutional orders to buy or sell large blocks of securities. Traders at Amore's firm listened to the squawk boxes and traded ahead of the large orders to make a profit from the price movements, the SEC said. The brokers charged by the SEC are Ralph Casbarro, who worked at Citigroup Global Markets; David Ghysels, formerly at Lehman Brothers; Kenneth Mahaffy, formerly at Merrill Lynch and Citigroup; and Timothy O'Connell, formerly at Merrill Lynch. On more than 400 occasions, day traders at A.B. Watley, the brokerage unit of Watley Group, where Amore was chief executive officer, traded ahead of the large orders between at least June 2002 and September 2003, making gross profits of at least $650,000, the SEC said. The brokers were compensated about $290,000 for their part and Casbarro and Mahaffy were compensated with secret cash payments, the SEC said. "These brokers were duty-bound to keep information about large customer orders confidential and to use it to benefit the customer," Mark Schonfeld, head of the SEC's northeast regional office, said. Attorneys representing Amore, O'Connell, Mahaffy, Ghysels and Casbarro could not immediately be reached for comment.
How many different frauds can this John Amore guy be involved, before the SEC will put him in jail? Another case of the SEC not protecting investors interests. It's shameful.
The SEC is not there to protect investor interests. It's there to protect the big institutions so they can keep shitting on the small investor.
Reminds me of the same thing that Pasternak was doing when he was the head of Knight Trimark....but Pasternak "busted" himself by bragging to the WSJ about how to front run. This may be of interest: http://www.stocktrading.com/wsjknight1.shtml Don
Apparently, to ensure that former A.B. Watley CEO Amore's fraudulent scheme kept working, and couldn't be proven in court, a Merrill Lynch compliance manager was also involved. SEC Press and Litigation Releases "... Between at least June 2002 and September 2003, the Watley day traders traded ahead of orders they heard on the Citigroup, Merrill, and Lehman squawk boxes on more than 400 occasions, making gross profits of at least $650,000. The Commission alleges that, in exchange for live audio access to the squawk boxes, Amore, together with others at Watley, compensated the brokers with commission-generating trades. Additionally, Watley traders compensated Casbarro and Mahaffy with secret cash payments. By divulging confidential information concerning customer orders, the brokers breached duties of confidentiality and trust they owed to their employers and to their employers' customers. These brokers also violated their firm's written policies requiring confidential treatment of customer information..."