• 12/30/2009
    Last Distribution
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SEC v. Specialist Firms

SEC v. Specialist Firms

Dear Injured Customers, please note that the sixth and scheduled last distribution in this matter was made on December 30, 2009. You may read the Orders at the SEC website.

This distribution plan ("Plan") concerns the seven Fair Funds established pursuant to the U.S. Securities and Exchange Commission's ("Commission") orders to house the disgorgement and civil penalties obtained as part of the Commission's settlements with the seven New York Stock Exchange ("NYSE") specialist firms: 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. (together the "Specialist Firms"). In its orders, the Commission found that from at least 1999 to 2003, the Specialist Firms violated their basic obligation to serve public customer orders over their own proprietary interests.

The Specialist Firms had a general duty to match executable public customer or "agency" buy and sell orders and not to fill customer orders through trades from the firms' own account when those customer orders could be matched with other customer orders. Through various forms of improper conduct, the Specialist Firms violated this obligation by filling orders through proprietary trades rather than through other customer orders. The unlawful conduct took two basic forms: Specialist Firms would "interposition" by buying stock for the firm dealer's account from the customer sell order, and then filling the customer buy order by selling from the dealer account at a higher price - thus realizing a profit for the firm account. Alternatively, Specialist Firms would fill agency orders through a proprietary trade for the firm's account - and thereby improperly "trade ahead" of the other agency order. As a consequence, the customer order that was traded ahead of was disadvantaged by being executed at a price that was inferior to the price received by the dealer account. By engaging in these forms of unlawful conduct the Specialist Firms caused over $157 million in customer harm.
The distribution plan has been approved by the SEC with modification for payment of post-judgment interest. The Order approving the plan is located on the SEC's website.

If you wish to determine if you have been identified as an injured customer or wish to ascertain whether the distribution amount accurately reflects the Disgorgement Amount with respect to your violative trades you may contact us. You must submit your request electronically using the contact us section on this site, leave a message telephonically or mail your request. Specific information should accompany your request such as: your full name, the legal name of any business entity, the last four digits of the tax identification number, listing of applicable trades you believe were damaged (dates, shares, security, symbol, broker name, clearing firm name, etc.) and an explanation of your request. The suggested method is to submit an email or mail a letter due to the anticipated high volume of inquiries.

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