Two dozen major Wall Street securities firms agreed to settle charges that they fixed prices on the Nasdaq market, Attorney General Janet Reno said Wednesday.
Speaking to reporters after Nasdaq had closed for the day, Ms. Reno said the firms agreed not to pressure brokerage houses to artificially inflate the spread between the buy and sell price of a stock.
This practice reaped millions of dollars in profits for the firms because investors sold their stocks at below-market rates and bought them at above-market prices.
"This will restore true competition," Ms. Reno said.
Justice charged these firms harassed brokers who quoted prices in one- eighth point intervals rather than the one-quarter point intervals that are the industry standard.
As part of the settlement, the firms agreed to randomly monitor phone conversations between their Nasdaq traders and other brokerage houses. The monitoring is intended to identify brokers who refuse to deal with investment houses that do not artificially inflate the spread.
The firms also must hire antitrust compliance officers who will oversee the phone monitoring systems. The deal requires that these officers listen to at least 3.5% of all calls between brokers, up to a maximum of 70 hours per week.