* Traded ahead of customers between 1999 and 2005
* E*Trade to pay $34 million
* Six firms to pay total of $42 million
(Corrects figure in bullet point and 1st paragraph to $34 mln
from $40 mln)
NEW YORK, March 5 Online broker E*Trade
Financial Corp (ETFC.O) will pay nearly $34 million after U.S.
regulators ruled its unit was among six firms that improperly
executed trades ahead of customer orders, known as front
running, between 1999 and 2005.
The unit, E*Trade Capital Markets LLC, and five other
firms, "failed to meet their basic obligation as specialists to
serve public customer orders over their own proprietary
interests while executing trades" on the Chicago Stock
Exchange, the Securities and Exchange Commission said late on
The five other firms that were served the civil injunction
were: Automated Trading Desk Specialists LLC, Melvin Securities
LLC, Melvin & Company LLC, Sydan LP, and TradeLink LLC. The six
firms agreed to pay $42 million in total, the SEC said.
E*Trade, which has suffered a string of quarterly losses
due to its deteriorating mortgage business, said in an SEC
filing it "neither admitted nor denied the allegations," but
would pay the $28.3 million charge and another $5.7 million
(Reporting by Jonathan Spicer, Editing by Maureen Bavdek)