3 More Brokerages to Settle in Trading Suit

Three more brokerages--Jefferies & Co., Cantor Fitzgerald and Montgomery Securities--agreed to pay a total of $45 million to settle a 1994 class-action lawsuit that alleged price-fixing on the Nasdaq Stock Market, attorneys said Thursday.

With the latest settlements, six of the 37 brokerages named in the suit have agreed since April to pay $98.9 million overall to settle the complaint. Other settlements are expected in the next few weeks, said investor attorney Robert A. Skirnick.

Los Angeles-based Jefferies, New York-based Cantor Fitzgerald and San Francisco-based Montgomery all denied wrongdoing.

Each settlement agreement said: “The settling defendant vigorously denies each and every one of plaintiffs’ allegations of unlawful conduct and has alleged a number of defenses to plaintiffs’ claims, and disclaims any wrongdoing or liability whatsoever.�

Jefferies, a unit of publicly traded Jefferies Group Inc., agreed to pay $10.3 million, Cantor Fitzgerald $14.7 million, and Montgomery $20 million. The settlements are subject to final court approval.

“We believe this settlement is clearly in the best interest of our shareholders, clients and customers,� said Michael Klowden, Jefferies’ president. The brokerage, an industry leader in equity trading services for institutional investors, set aside reserves for the settlement, which won’t affect the firm’s third-quarter earnings, he said.

Cantor Fitzgerald’s outside attorney, Moses Silverman in New York, said, “We’ve settled,� and declined further comment.

Montgomery executives and outside attorneys did not immediately respond to requests for comment.

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The class-action suit, filed in New York federal court, accused the brokerages of colluding to keep trading spreads artificially wide on the nation’s second-largest stock market between 1989 and 1994. These spreads--the difference between the buying and selling price of a stock--have been a major source of dealer profits.

“Investors were denied the benefits of competition and were trading in a market that was rigged,� Skirnick said.

Between 500,000 and several million individual and institutional investors lost at least several hundred million dollars as a result of dealer collusion, the complaint said.

The brokerages that previously settled were Herzog, Heine, Geduld Inc., which agreed to pay $30.6 million; Kidder Peabody Inc., which agreed to pay $14.1 million; and Sherwood Securities Corp., which settled for $9.2 million.

Among the defendants in the suit that have not yet settled are Merrill Lynch & Co., Paine Webber Group Inc. and Goldman, Sachs & Co. Most have denied wrongdoing.