Three former brokers of Citigroup, Merrill Lynch and Lehman Brothers face a second trial on charges they conspired to commit fraud by allowing day traders to eavesdrop on orders being discussed on investment firms’ internal “squawk boxes.” Four current and former executives at the day trading firm A. B. Watley Group will also be retried for their alleged roles in the scheme.
After a seven-week trail seven defendants including these former brokers were acquitted of securities fraud and other charges, but the jury deadlocked on the conspiracy charges opening the door to a retrial.
Prosecutors assert the brokers conspired to give Watley traders access to large orders broadcast over intercoms, or “squawk boxes”, in exchange for cash and commissions. The traders bought or sold stock ahead of the orders in anticipation of share-price swings, prosecutors say.
During the first trial, John J. Amore, Watley’s former chief executive and a prosecution witness, testified he introduced the intercom scheme when he was hired in 2002 as a consultant. Amore pleaded guilty to conspiracy to commit securities fraud prior to the trial.
The law firm of Shepherd Smith and Edwards represents institutional and individual investors in investment claims. Collectively, we have recovered more than $100 million from investment and securities brokerage firms. If you or your firm has sustained significant losses in investments contact us to arrange a free confidential consultation with one of our securities litigation lawyers.