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Big Board turns probe gun on top brokerages

New York, April 18: Just as Wall Street was ready to close the books on a spate of image-tarnishing scandals, the New York Stock Exchange (NYSE) revealed Thursday that it is investigating possible wrongdoing at several major stock-trading firms.

The probe appears to centre on whether so-called specialist firms, which act as middlemen between buyers and sellers of stock, took advantage of customers by “front running” their orders.

Typically in such situations, an investor attempts to buy stock at a certain price, but the firm jumps ahead to buy the shares for its own account and then resells them to the customer at a higher price.

One firm under scrutiny, FleetBoston Financial Corp, said it has suspended a trader as part of its own internal investigation into improper trading.

The NYSE launched its investigation of the specialist firms earlier this year, according to sources familiar with the matter. It is unclear how advanced the probe is or whether it has turned up any evidence of wrongdoing.

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