August 1, 2006
Jury acquits former NYSE trader Scavone
By Christine Kearney
NEW YORK (Reuters) - A federal jury on Tuesday found Robert
Scavone, a former New York Stock Exchange trader accused of
securities fraud, not guilty.
Scavone, who worked at a unit of Van der Moolen Holding NV,
was indicted in Manhattan federal court along with 14 other
traders in April 2005.
Two traders have pleaded guilty and two have been convicted
for making improper trades that enriched specialists, or New
York Stock Exchange traders that make markets in securities, at
the expense of investors.
Scavone, 46, was found not guilty of one count of
securities fraud relating to trading in stock of Eli Lilly &
Co. between August 2001 and April 2003.
""The government's case was built on a patchwork of
assumptions of guilt and faulty inferences," said Scavone's
attorney Andrew Schapiro.
Scavone worked at the Van der Moolen Specialists USA LLC
unit of Amsterdam-based Van der Moolen Holding. He faced a
maximum sentence of 20 years in prison.
Prosecutors said the broader scheme cost investors $19
million. According to the indictment, from 1999 to April 2003
the specialists violated NYSE rules by trading ahead of
investor orders. They also inserted themselves in trades in
which a buyer and seller should have been matched.
Two other Van der Moolen specialists, Michael Hayward and
Michael Stern, were convicted in July of securities fraud.
Schapiro said he hoped the acquittal would have an impact
on whether the government would pursue the cases still to go to
"There was no intentional wrongdoing. These trades were
instead the natural product of the fast pace of trading on the
New York Stock Exchange," he said.
"They were the consequence of having a human being dealing
with as many as 40 or 50 trades a minute coming from both
computers and floor brokers at the same time."
Heather Tasker, a spokeswoman for the U.S. Attorney's
Office, had no comment on the acquittal.