Published 07/30/2008 - 2:00 p.m. GMT
A federal appeals court dealt what was likely to be the final blow to the ill-fated prosecution of 15 New York Stock Exchange specialists Wednesday by overturning the securities fraud convictions of two of the floor supervisors.
The 2nd U.S. Circuit Court of Appeals threw out the convictions of Michael Hayward and Michael Stern, who were convicted in July 2006 and sentenced to six months in prison.
Hayward, 57, and Stern, 55, who had worked for Van der Moolen Specialists USA LLC, were the only specialists still facing prison time after convictions at trial. They had been accused of stealing $1 million apiece by skimming small amounts of money from stocks they oversaw.
The ruling all but ended a prosecution in which the government accused the powerful floor supervisors of using their inside positions to earn an estimated $20 million illegally for themselves and their firms.
Specialists play the crucial role of matching buyers and sellers in individual stocks, though their numbers have declined as computers have taken a larger role in the trading of securities.
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Published 07/30/2008 - 1:30 p.m. GMT
Focused on getting the nation's credit gears smoothly working again, the Federal Reserve is letting Wall Street firms draw emergency loans into next year and giving financial companies more options to help them overcome credit problems.
The Fed's announcement on Wednesday marks its latest effort to get credit - the economy's oxygen - flowing more freely. A global credit crisis that erupted last August has hobbled the U.S. economy, already reeling from a housing meltdown.
As financial companies have racked up multibillion dollar losses on soured mortgage investments and credit problems spread to other areas, firms have hoarded cash and clamped down on lending. That has crimped spending by people and businesses, which in turn has weighed on the national economy - a vicious cycle the Fed wants desperately to break.
To that end, the Fed announced that investment houses can now tap the central bank for a quick source of cash through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.
Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said. And, it also will let commercial banks, in a separate program, bid on cash loans that last longer - for 84 days, besides the 28-day loans now available.
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