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Reed seeks compensation fund for investors

Nov. 12, 2003 at 11:19 AM

NEW YORK, Nov. 12 (UPI) -- The interim chairman of the New York Stock Exchange says specialist firms that violate trading rules should reimburse investors.

John Reed says in an interview published in Wednesday's Financial Times (London) such a compensation fund should be started with $150 million, the estimated losses from irregularities listed by the U.S. Securities and Exchange Commission in an as-yet unpublished report.

"I want to be able to say to American investors that if we mishandled your transaction we're going to pay you back," Reed said. He also called on the culprits to admit their guilt and acquiesce to penalties.

Specialist firms currently under investigation for allegedly trading ahead of customers' orders, interfering with transactions and failing to execute orders include LaBranche & Co, Fleet Specialist, Vand Der Moolen, Bear Wagner, and Spear, Leeds & Kellogg.

Observers said it was unlikely any of the firms, which are supposed to smooth trading, would admit to wrongdoing.

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