Another defeat for the Southern District of New York in its prosecution of specialist traders: In Manhattan on Monday, US District Judge Sidney Stein vacated the guilty pleas of Patrick McGagh and Joseph Bongiorno, both former specialists at Van der Moolen Specialists USA. The two men pleaded guilty to securities fraud in 2006 in connection with an interpositioning scheme, but the Second Circuit in June upheld a District Court acquittal of specialist David Finnerty and in July reversed the convictions of Van Moolen specialists, Michael Hayward and Michael Stern, ruling in both instances that the evidence was insuffcient to prove deception. In a related case, prosecutors dropped criminal charges against former LaBranche & Co. specialist Freddy DeBoer ($WSJ$, Investment News).
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