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Four former brokers accused in eavesdropping plot

Tuesday, Aug. 16, 2005 | 9:53 a.m.

NEW YORK -- Four former stockbrokers at major securities firms were accused Monday of accepting bribes from day traders who wanted to eavesdrop on customer order information to make easy profits.

In separate actions, the Justice Department and the Securities and Exchange Commission contended that day traders paid thousands of dollars to the four brokers -- who worked at Citigroup, Lehman Brothers and Merrill Lynch -- for access to their so-called squawk box intercoms, which broadcast their biggest customers' stock orders. The traders, in turn, used that information to buy those same stocks before the large orders bid up the price, and quickly sold them for hundreds of thousands of dollars in gains. This type of stock-selling scheme is known as front running.

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