Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, July 27, 1994 TAG: 9408180024
SECTION: BUSINESS PAGE: B7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Short
The series of federal lawsuits filed this month allege some of Wall Street's largest firms - Merrill Lynch & Co., Lehman Brothers, Alex Brown & Sons Inc. - conspired to thwart competition in the pricing of stocks on Nasdaq, the electronically linked network of brokers that calls itself ``the stock market for the next 100 years.''
The central charge is that Nasdaq brokers have an unspoken agreement to charge excessively wide ``spreads'' in Nasdaq stocks in order to fatten their profits at the expense of individual investors.
``They're very serious allegations about a very serious conspiracy,'' said Arthur M. Kaplan, a Philadelphia attorney handling one of the cases.
A spread is the difference between the bid, the price buyers are willing to pay for a stock, and the ask, the price requested by sellers.
The spread amounts to the difference that the brokers, known as market makers, receive for executing a trade. A market maker can buy or sell orders on behalf of customers or out of their own accounts.
Nasdaq, which is not a defendant in the suits, and several of the brokers denied any collusion.
by CNB