16 December 2003

Calpers Sues NYSE, Firms, Alleging Fraudulent Trades

Calpers Sues NYSE, Firms, Alleging Fraudulent Trades: "

(Bloomberg) -- The California Public Employees' Retirement System, the largest U.S. pension fund, sued the New York Stock Exchange and seven specialist firms alleging they used the trading system to profit at the expense of investors.

The specialists, who match buyers and sellers, used their knowledge of pending orders to trade for their own accounts, and intervened in trades when it wasn't necessary, said Calpers President Sean Harrigan. ``The NYSE not only knew these practices existed, but perpetuated them. It profited from them,'' he said.

The aim of the lawsuit is to recoup at least $150 million in trading losses and to push the NYSE to more governance and regulatory changes, Harrigan said. Calpers, which has $155 billion in assets, has pressed the NYSE to separate its regulatory and commercial functions and Harrigan said the specialists are ``the poster child of a failed system of self-regulation.''

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