Legal

Alleged Floor Trader Scheme Haunts NYSE

The New York Stock Exchange (NYSE) has accused a floor trader of being involved in a kickback scheme involving an unnamed broker.

According to The Wall Street Journal (WSJ), the NYSE’s regulatory arm has accused Kevin Lodewick  a floor broker currently at Peter Mancuso & Co.  of accepting around $2,000-worth of payments over 11 months from an employee of an unnamed brokerage firm, in exchange for sending the firm millions of dollars from customer orders.

Lodewick was employed at Quattro M Securities, one of the larger brokerages on the NYSE trading floor, during the time of the alleged activity.

“This scheme was conducted in complete disregard of the interests of Quattro’s customers,” the July 2 complaint stated.

Lodewick didn’t respond to requests for comment. His current boss, Peter Mancuso, suspended the broker after calls from the WSJ. “Kevin Lodewick will not be working at Mancuso until the allegations have been resolved,” he said in an email. He declined to answer other questions.

The alleged payments ranged from $10 to $125, and were sent over Venmo between March 2017 and early February, according to the complaint. The complaint also alleged that Lodewick lied to investigators and failed to hand over text messages between him and the individual at the brokerage firm. In addition, the unnamed firm paid for Lodewick’s trip to a private island in the Bahamas, owned by one of its executives.

The complaint has brought up old questions about whether the NYSE’s floor traders are making money at the expense of investors — and is a reminder of a dark period in the Exchange’s history. Around the turn of the millennium, the U.S. Securities and Exchange Commission (SEC) and federal prosecutors accused a number of NYSE floor traders of making illegal profits at their customers’ expense.

NYSE Regulation wants to have Lodewick permanently barred from the floor, stating that he failed to observe the “high standards of commercial honor” required of a floor trader.

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