The jury in the long-running “squawk box” prosecution returned a verdict of guilty on a charge of conspiracy yesterday for three former brokers and three former day traders. The defendants, who were from Merrill Lynch, Citigroup, and Lehman Brothers, allegedly conspired to misuse information from company squawk boxes for insider trading.
Reuters reports that the six defendants were charged with scheming between 2002 and 2004 to allow day traders at A.B. Watley to listen to their firms’ internal speaker systems (known as “squawk boxes”) through open telephone lines. This allegedly allowed the traders to overhear nonpublic pending orders by institutional customers.
Prosecutors claimed that “in exchange for access to the squawk box information, the day traders paid bribes to the defendants” in the form of commissions from other trades. Reuters reports that the defendants each face up to 25 years’ in prison. Sentencing is scheduled for July 31.
In a prior related trial, three former brokers and four former day traders were acquitted of fraud charges, but the jury failed to reach a decision on the conspiracy charge, leading to a mistrial and a second trial that began March 30.