Thirty-one brokerages are in talks to pay as much as $930 million to investors to settle a class-action lawsuit that claimed brokerages colluded to set prices artificially high on the Nasdaq stock market, lawyers involved in the negotiations said.
The discussions, which may result in a preliminary agreement soon, would raise the overall settlement agreed to by brokerages to more than $1 billion. Such an agreement would be one of the largest antitrust payments ever in a civil lawsuit.
“The evidence is strong to support the conclusion that never before in the history of stock trading have so few people taken so much money from so many,” said plaintiffs’ attorney Robert Skirnick, a partner with Meredith, Cohen, Greenfogel & Skirnick in New York.
Meanwhile, the SEC is preparing civil charges against dozens of individual traders for allegedly collaborating to keep prices artificially high, the Wall Street Journal reported. Hundreds of traders are under investigation, PaineWebber Inc. President Joseph Grano said earlier this week.
The SEC’s inquiry follows the commission’s censure last year of the National Association of Securities Dealers, which runs Nasdaq, for allowing dealers to collaborate on prices.
The complaint alleged that as many as several million investors lost hundreds of millions of dollars because of collusion among the securities firms between 1989 and 1994. This collusion caused spreads–the difference between the prices at which stocks are bought and sold and which represents part of the firm’s profit–to be artificially wide.
