Thursday, September 9, 2010

Squawk Box Eavesdropping - $500. Fine...

...what a hoot!
NY - A former Smith Barney broker was sentenced to no jail time on Wednesday after he cooperated with federal prosecutors in a probe into an alleged scheme to misuse brokerage-firm "squawk" boxes. (Also called "hoot n holler" and "shout down" boxes, these are always-on intercom systems used at financial trading firms. Sending broadcasts from these devices to unauthorized persons is illegal eavesdropping.)

He now works as a car salesman, was ordered to pay a $500 fine by U.S. District Judge I. Leo Glasser in Brooklyn, but the judge imposed no jail term.

The 48 year old pleaded guilty in 2005 to conspiracy to commit securities fraud. He didn't testify at trial, but provided information that prosecutors said led to the conviction of six people last year, including three former supervisors at defunct day-trading firm A.B. Watley Inc.

Prosecutors from the U.S. Attorney's office in Brooklyn had alleged that he placed an open telephone line next to his squawk box for lengthy periods, allowing day traders at A.B. Watley to secretly eavesdrop on block orders by institutional clients. He received cash bribes in return, prosecutors said. (more) (technical details)