Wall Street trading firms settle with SEC for cheating their customers

Again, where are the Republicans who were so damned eager to ram Social Security through these pirates? It's bad enough 401K plans are relatively unregulated and Wall Street gouges clients but can you imagine the losses if they touched Social Security?

The Securities and Exchange Commission disclosed the allegations after negotiating settlements. The firms did not admit or deny the charges but agreed to pay a total of more than $69 million in forfeited profits and penalties.

The 14 firms named in the complaints are all “specialists,” trading firms that have a specific duty to maintain orderly markets by matching buyers and sellers and standing ready to conduct trades when buyers or sellers are scarce. They include units or subsidiaries of well-known Wall Street names, including E*Trade Capital Markets, Goldman Sachs Execution and Clearing, Knight Financial Products and TD Options.

Regulators said the firms had engaged in various types of “front-running,” which involves trading ahead of customer orders or timing their own trades to seize profits. For instance, specialists that had a big order to buy a stock would first buy it from a seller themselves and then illegally bid up the price moments before selling it to profit on the transaction.

Regulators say specialist firms made a total of $58.4 million, which should have gone to their customers.

If only this was the first time such swindling had occurred on Wall Street.