Lehman Brothers was fined $500,000 by the New York Stock Exchange for improper trading of a stock near the close of trading in December 2002. According to NYSE Regulation's hearing panel decision, Lehman was following a trading strategy that involved deals to sell about 2 million shares of an unidentified stock that was slated to move into the S&P 500 index the next day. Regulators charged that the strategies, implemented in the last few minutes of trading, caused the stock to close at $59, down from $59.61 just before the close, and also caused "Lehman's customers to potentially receive a lower price on the facilitation contracts." Lehman, which neither admitted nor denied the charges, earned a profit of about $248,000 on the trades, says NYSE Regulation.
In addition, regulators said the activity was "disruptive and caused excess market volatility" and that Lehman did not have policies and procedures in place to monitor such trades.
Kerrie Cohen, a spokeswoman at Lehman, declined to comment.