CalPERS today filed a lawsuit against the New York Stock Exchange and seven NYSE specialist firms, alleging they defrauded investors. The lawsuit, filed in U.S. District Court in New York, seeks class-action status and at least $155 million in damages, according to Sean Harrigan, board president of the $156 billion California Public Employees' Retirement System, Sacramento. Specialist firms named in the suit were LaBranche & Co.; Van der Moolen Specialists; Bear Wagner Specialists; Fleet Specialist; Performance Specialist Group; Susquehanna Specialists; and Spear Leeds & Kellogg. In addition, Michael LaBranche, LaBranche chairman, was named as an individual defendant.
The suit alleges the NYSE and the firms engaged in a trading scheme that "created untold shareholder losses," Mr. Harrigan said at a press conference. Exchange officials knew of the trading abuses by the specialists but "looked the other way" or leveled only "a slap on the wrist," Mr. Harrigan said.
Ray Pellechia, NYSE spokesman, declined immediate comment; spokesmen from the specialist firms either declined to comment or could not be reached for comment by press time.
