Richard Ney

The Ney Report


Date of Birth: 11/12/1916
Date of Death: 07/18/2004
Age at Death: 87
Cause of Death: Heart failure



For six years in the mid 1980’s, Richard (Maximilian) Ney wrote “The Ney Report,” a hard hitting stock market newsletter, wherein he would expose market manipulation by NYSE Specialists aided and abetted by the SEC and other insiders.

The Ney report


He received much attention for “The Wall Street Jungle” (1970), “The Wall Street Gang” (1974), and “Making it in the market: Richard Ney’s low risk system for stock market investors” (1975) books that criticized market specialists on the stock exchange floor and what he considered a complacent regulatory body, the Securities and Exchange Commission. He also became an early advocate of electronic placement of “buy” and “sell” orders.

Ney Wall Street Jungle    Ney Wall Street Gang Ney Making it in the Market

… and decades later, these are the headlines:


APR. 12, 2005, 11:16 A.M. ET Twenty specialists who managed trades on the floor of the New York Stock Exchange were indicted Tuesday, charged with fraudulent and improper trading practices by the Justice Department. The Securities and Exchange Commission filed civil charges against the specialists as well.

The SEC’s division of inforcement said that between 1999 and mid-2003, specialists at five firms put their firms’ orders ahead of customers’ orders, causing those customers to get inferior prices.


April 12, 2005 (Bloomberg) — Fifteen New York Stock Exchange specialists, the traders responsible for keeping an orderly market on the world’s biggest stock exchange, were indicted for fraudulent and improper trading.

In the biggest federal crackdown on illegal trading at the NYSE since 1998, the U.S. Attorney’s Office in Manhattan will announced the charges this morning with representatives from the FBI and Securities and Exchange Commission. Indicted are current and former employees of firms including LaBranche & Co., Van der Moolen NV, Bear Wagner Specialists, Goldman Sachs Group Inc.’s Spear Leeds & Kellogg and Banc of America Specialist.

The charges stem from a two-year probe of specialists, who match by and sell orders on the floor of the exchange and trade for their own accounts. The NYSE’s seven specialist firms last year agreed to pay $247 million to settle allegations that they profited on trades at the expense of their customers.

“To see criminal activity on the floor is really astounding,” said Jacob Zamansky, a New York lawyer who represents investors in arbitrations against brokers. “This occurred under the watch of the NYSE. It raises questions about whether the NYSE can properly supervise the people there.”

If convicted, the specialists face a maximum of 20 years in jail on each count of securities fraud and fines of $1 million to $5 million.

“These defendants broke the rules repeatedly,” U.S. Attorney David Kelley said at a press conference.

Indicted Specialists

Former Van der Moolen Senior Managing Partners Joseph Bongiorno and Patrick McGagh Jr., Frank Delaney of Bear Wagner and LaBranche’s Freddy DeBoer are among the specialists indicted.

The NYSE’s other specialist firms are SIG Specialists Inc. and Performance Specialist Group. The exchange first said in April 2003 that it was investigating the firms to determine whether they illegally traded stocks ahead of their clients.

Kelley, the SEC and the NYSE have been investigating individuals in connection with the violations.

In a statement, Kelley said the indicted specialists violated federal securities law “through patterns of fraudulent and improper trading over approximately four years.” He didn’t name the individual specialists or the firms they worked for.

The U.S. Department of Justice first targeted illegal trading on the NYSE in 1998, when it charged eight floor brokers and two executives of Oakford Corp.

SEC Passes “Trade-Through” Rule

Both issuers and investors, however, may face some turbulent times as the New York Stock Exchange makes a transition to a hybrid trading model.

Stephen Taub and Craig Schneider,

April 08, 2005

The Securities and Exchange Commission voted 3-to-2 late yesterday to require that all investor trades be executed at the best price, even if stock markets must fill the order through a competitor.

SEC Chairman William Donaldson once again cast the deciding vote on an issue that was opposed by his two fellow Republican commissioners, according to published reports. “We’re attempting through new rules to protect the concept of best bid to be honored in the marketplace,” he said in an interview on the Fox News cable channel

The “trade-through” rule — part of Regulation National Market Structure (Reg NMS) — is a watered-down version of an SEC proposal from late last year and is widely deemed a victory for the New York Stock Exchange, which Donaldson once headed, according to The Wall Street Journal. The earlier version would have trivialized the role of the NYSE’s specialists, the paper noted. The floor-based trading specialists of the American Stock Exchange also already adhere to the rule

On the other hand, added the Journal, market pros deem the big losers to be electronic exchanges such as the Nasdaq Stock Market. The Nasdaq had hoped that the SEC would allow investors to trade on whichever market they chose, even if it didn’t offer the best price — for example, if investors were more concerned with speedy execution of their orders.

When the SEC considered revisions to the trade-through rule, according to The New York Times, it determined that investors should be able to bypass “slow markets,” even if those markets had better prices. In response, noted the paper, the NYSE announced that it would update its systems to enable automatic best-price execution — which then qualified the Big Board as a “fast market” that could not be sidestepped. Those NYSE changes are scheduled to take effect next spring, added the Times, when Reg NMS will begin to be phased in.

In a December interview with, Steve Braverman, managing director at consultancy Tahoe Advisors, said he believes that the NYSE will have a tricky balancing act as it makes a transition to a hybrid trading model. By his lights, if more orders begin to flow through NYSE’s electronic system — and specialists are restricted in how much they can trade for their own accounts — there’s a greater chance that those specialists could become disengaged.

In the near term, that could be risky for both issuers and investors. Braverman explained that if specialists’ earnings decrease as a result of structural changes in the market, they may lose the incentive to invest capital as often, allowing forces of supply and demand to drive stock prices more freely. “That will lead to more volatility,” he said, and potentially cause major investors to balk at taking positions for fear of moving the market too much without specialist support in times of market stress.

In a statement, Sen. Richard Shelby (R-Ala.), the chairman of the Senate Banking Committee, decried the 3-to-2 vote as a reinforcement of “what appears to be a disturbing trend of actions that have resulted in split decisions,” according to the Journal. Shelby added that “splits dilute the actions of the commission and undermine their authority to speak as a unified body.”

Donaldson’s two fellow Republican commissioners, Cynthia Glassman and Paul Atkins, were outspoken opponents of the new rule. Glassman called it a “massive regulatory intrusion into the operation of the markets that limits investor choice and impedes innovation and competition,” according to the newspaper.

This is the latest rule passed by the SEC on the support of the two Democratic commissioners, Harvey Goldschmid and Roel Campos, including new governance rules for mutual funds and the hedge fund registration requirement. Donaldson also supports the now-languishing proxy access rules, which are also opposed by the Glassman and Atkins.