UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

SEA CARRIERS, LP I and SEA CARRIERS CORPORATION (individually and on behalf of those similarly situated), 101 t;W 465ts Plaintiffs,

NYSE EURONEXT., et als, 7 JUN '0

Defendants. ^p/^ ?^ ^,'¢ ^$ Kr)^CASSiH^4^1 5 INTRODUCTION

1. Sea Carriers LP I and Sea Carriers Corporation (collectively "Sea Carriers" or

"Plaintiffs") bring this class action on behalf of all persons who placed market orders to purchase

or sell securities on the New York Stock Exchange through the New York Stock Exchange's

Super Designated Order Turnaround ("SuperDOT") System between October 17, 1998 and the

present (the "Class Period")

2. SuperDOT is an electronic trading system designed to facilitate the transmission

of both market and limit orders directly to the trading post (and specialist) where the security is

traded. The goal of SuperDOT, at least ostensibly, is to allow for a more rapid - and, therefore,

more efficient - transaction, because the order can be delivered directly to the specialist rather

than phoned down to a floor trader and done manually. SuperDOT is intended to be used for

smaller orders (under 10,000 shares).

3. During the Class Period, defendants materially misrepresented to Class Members the market for execution services and costs of execution of trades on the New York Stock Exchange; manipulated trading on the New York Stock Exchange; and colluded to, and did,

raise, fix and maintain at anti-competitive levels the costs of execution services provided to Class

Members. These practices were consistent with Defendants' stated willingness (as admitted to

the SEC) to "Screw the Dots" or "[Expletive] the Dots".

4. Defendants exploited their exclusive control over order execution and publication

of the data relating to order execution to create, maintain and conceal the existence of two

distinct submarkets on the New York Stock Exchange: (1) a dominant, "insider" submarket

comprised of trades executed for the benefit of those members of the New York Stock Exchange

who operated on the floor of the exchange (the "Floor Submarket"); and (2) an inferior,

"outsider" submarket comprised of SuperDOT trades (the "SuperDOT Submarket")

5. The primary beneficiaries of the Floor Submarket were the floor brokers

themselves and large non-member financial institutions (such as pension funds) that traded

through floor brokers.

6. To accomplish this intentional, systemic "subordination" of SuperDOT trades,

Defendants and their co-conspirators made material misrepresentations, concealed material

information and used a number of contrivances, many of which were facilitated by new technology systems costing billions of dollars, which allowed Defendants and their co- conspirators to easily and rapidly share information and exploit informational advantages to manipulate the execution of floor orders over SueprDOT orders.

7. According to an investigation by Plaintiffs' counsel, including information provided by a confidential informant who worked for a New York Stock Exchange specialist during the Class Period, these contrivances included:

(a) filling floor orders ahead of simultaneously or previously placed SuperDOT orders;

2 (b) allowing floor brokers to see the incoming SuperDOT orders so the floor broker could devise bidding strategies which took unfair advantage of the information and harmed SuperDOT customers;

(c) routinely slowing the execution time of SuperDOT market orders that were placed under advantageous market conditions (i.e., orders executed with price improvement); and

(d) routinely accelerating the execution time of SuperDOT orders under disadvantageous market conditions (i.e., orders executed outside the quote existing at the time the orders were sent to the New York Stock Exchange).

8. Empirical evidence confirms that Class Members received worse execution

quality using SuperDOT than was provided to similar floor orders. That empirical evidence

demonstrates that those who traded through the SuperDOT system got consistently worse

executions than those who traded through Floor Brokers regardless of whether the orders through

SuperDOT received faster or slower execution.

9. As a result of Defendants' collusive activity, Sea Carriers and the Class suffered

significant injury, as execution costs to Class Members were fixed and maintained at levels

above those which would have resulted absent collusive activity. A conservative estimate based

upon empirical evidence fixes the amount of this injury at approximately one billion dollars per

year.

10. Defendants' manipulation, collusion and conspiracy to raise, fix and maintain

investor costs of doing business on the New York Stock Exchange via SuperDOT at anti- competitive levels violates federal antitrust laws and federal securities laws.

JURISDICTION AND VENUE

11. Sea Carriers brings this class action pursuant to Sections 4 and 16 of the Clayton

Act, 15 U.S.C. §§ 15, 26, for treble damages and injunctive relief, as well as reasonable

3 attorney's fees and costs. Sea Carriers and Class Members are entitled to such relief as a result of Defendants' violations of federal antitrust laws, including Sections 1 and 2 of the Sherman

Act, 15 U.S.C.§1.

12. Sea Carriers also brings this class action pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78 et seq., and Rule lOb-5 promulgated thereunder, 17 C.F.R § 240.1 Ob-5.

13. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. § 1331; 15 U.S.C. § 78aa; 15 U.S.C. § 15; and 15 U.S.C. § 26.

14. Venue is proper in this judicial district pursuant to 15 U.S.C. § 22 and 28 U.S.C. §

1391(b) because each Defendant either resides in, is licensed to do business in, or transacts business in this district.

IDENTIFICATION OF PARTIES

PLAINTIFFS

15. Both Sea Carriers LP I and Sea Carriers Corporation are corporations organized and existing under the laws of the State of Delaware, which maintain a common principal place of business at 700 Canal Street, Stamford, Connecticut. From January 2003 through October 15,

2003, Sea Carriers LP I traded 1.3 billion such shares in a limited partnership structure in which

Sea Carriers Management LLC, an affiliated entity was its general partner. From October 16,

2003 through October 2005, Sea Carriers LP I traded approximately 800 million shares within the same structure. From 1998 through the end of 2002, Sea Carriers Corporation traded 4.5 billion shares of New York Stock Exchange-listed stock via SuperDOT through a joint venture or other form or contractual relationship with Empire Program, inc. A certification of Plaintiffs' trades is submitted herewith.

4 DEFENDANTS

NYSE Euronext

16. Defendant NYSE Euronext ("NYSE") is a holding company created by the

combination of NYSE Group, Inc. and Euronext N.V. NYSE Group,' Inc. is a wholly owned

subsidiary of NYSE Euronext that operates two securities exchanges: the New York Stock

Exchange and NYSE Arca, Inc. (formerly known as the Archipelago Exchange, or ArcaEx and

the Pacific Exchange).'

Classification of Defendants

17. One class of defendants named in this complaint is comprised of member firms

that maintain operations as Specialist, Floor-Broker and Routing Broker.2 These defendants are

referred to as the "Fully Integrated Defendants." The Fully Integrated Defendants have the

greatest degree of participation in the market (and, by extension, the greatest amount of

information regarding market dynamics), as they know how the New York Stock Exchange

executes orders from every facet of a trade - i.e., as routing broker, as floor broker and as

specialist.

18. A second class of defendants named in this complaint is comprised of member

firms that serve as both specialist and floor broker, but not as routing broker. These defendants

are referred to as the "Internally Integrated Defendants."

19. Even though a Fully Integrated or Internally Integrated Defendant would only act as a specialist for specific assigned stocks, the broker operations of the Fully Integrated and

Internally Integrated Defendants traded in all stocks (with other Defendants' specialist operations as needed),

1 The NYSE and ArcaEx merged in 2 006 to form the NYSE Group, Inc. 2 Each function is explai ned infra. 5 20. A third class of defendants named in this complaint is comprised of member firms

that serve as specialist only. These defendants are referred to as the "Independent Specialist

Defendants."

21. Collectively, all defendant specialist operations are referred to as the "Specialist

Defendants."

22. The fourth group of defendants include parties which directed orders for

execution, or executed orders, using the floor facilities of the NYSE.

Fully Integrated Defendants

23. Goldman Sachs Group, Inc. ("Goldman Sachs") is a global investment banking,

securities and investment management firm, and is the parent company of Spear, Leeds &

Kellogg Specialists LLC (" Spear Leeds"). Spear Leeds is the second largest specialist firm on

the New York Stock Exchange, making a market in approximately 550 listed securities.

Goldman Sachs Execution & Clearing, L.P., was formerly known as Spear, Leeds & Kellogg,

L.P. ("Goldman Sachs E&C"). Goldman Sachs E&C and Spear Leeds directed and brokered

orders through the NYSE, including through their NYSE floor brokers, for themselves and their

affiliates. Goldman Sachs controls the foregoing entities.

24. Bear, Stearns & Co., Inc. ("Bear Steams") is a broker-dealer subsidiary of Bear

Stearns Companies, Inc., an international investment banking; securities and derivatives trading; and clearance and brokerage firm. Bear Steams is a member of the New York Stock Exchange, and is the broker-dealer affiliate of Bear Wagner Specialists LLC ("Bear Wagner"). Bear

Wagner is the fifth largest specialist firm on the New York Stock Exchange, making a market in approximately 350 listed securities. Defendant Bear, Steams Securities Corp. ("Bear, Stearns

Securities") is a broker-dealer, who, with its parent, Bear Stearns, directed and brokered orders

6 through the NYSE, including through its NYSE floor brokers. Bear Stearns controls Bear

Wagner and Bear, Stearns Securities.

25. Bank of America Corporation ("BOAC") is a bank holdings company that

conducts its operations through banking and non-banking subsidiaries . BOAC operates its

banking activities under three charters: Bank of America, N.A.; Bank of America, U.S.A.; and

Fleet National Bank. On April 1, 2004, BOAC completed its merger with FleetBoston Financial

Corporation. BOAC is the parent company that controls Defendant Fleet Specialists, Inc.

("Fleet"). Defendant Fleet is the third largest specialist firm on the New York Stock Exchange,

making a market in approximately 430 listed securities. Bank of America Securities LLC

("BAS"), is also a controlled subsidiary of BOAC, which directed and brokered orders through

the NYSE, including through its NYSE floor brokers.

26. The routing broker operations of each of Goldman Sachs, Bear Steams and

BOAC are referred to herein as the "Integrated Routing Defendants" and the floor broker operations of Goldman Sachs, Bear Stearns and BOAC, in conjunction with the floor broker

operations of the Internally Integrated Defendants below, are referred to as the "Integrated

Broker Defendants."

Internally Integrated Defendants

27. Defendant LaBranche & Co., Inc. ("LaBranche, Inc.") is the parent company of

Defendant LaBranche & Co. LLC ("LaBranche LLC"). LaBranche LLC is the largest of the New

York Stock Exchange specialist firms, making a market in approximately 650 listed securities, seven of which are in the Dow Jones Industrial Average and 104 of which are in the S&P 500

Index. LaBranche LLC accounted for approximately 29% of the annual trading volume during the Class Period.

7 28. Defendant Susquehanna International Group, Inc. ("SIG") is a leading

institutional sales, research and market making firm. SIG is comprised of several trading and

investment-related entities, including Defendant SIG Specialists, Inc. ("SIG Specialists"). SIG is

the smallest of the New York Stock Exchange specialist furs, making a market in

approximately 150 listed securities.

29. Defendant Van der Moolen Holding, N.V. ("VDM Holding") is an international

firm engaged in the trading of equities, equity options, equity index options and bonds on the

securities exchanged in the United States and Europe. VDM Holding is the parent company of

Defendant Van der Moolen Specialists USA, LLC ("VDM Specialists"). VDM Specialists is the

fourth largest specialist firm on the New York Stock Exchange, making a market in

approximately 370 listed securities.

30_ The floor broker operations of LaBranche LLC, SIG, VDM Holding, in

conjunction with the floor broker operations of the Internally Integrated Defendants are referred

to as the "Integrated Broker Defendants."

Additional Defendants

31. Defendant Merrill Lynch, Pierce, Fenner & Smith Inc. (MLPF&S) is a wholly-

owned subsidiary of Defendant Merrill Lynch & Co., Inc. ("Merrill Lynch & Co.") (hereinafter

collectively referred to as "Defendant Merrill Lynch" or "Merrill Lynch"). MLPF&S, with

Merrill Lynch & Co., directed and brokered orders through the NYSE, including through their

NYSE floor brokers.

32. Defendant Citigroup Global Markets, Inc. ("Citigroup Global") is a wholly- owned subsidiary of the parent company Defendant Citigroup, Inc. (hereinafter collectively referred to as "Defendant Citigroup" or "Citigroup"). Citigroup Inc. Global Markets, with

8 Defendant Citigroup, Inc., directed and brokered orders through the NYSE, including through its

NYSE floor brokers.

33. Defendant Morgan Stanley Co., Inc. ("Morgan Stanley") is a global financial services fine that, through its subsidiaries and affiliates, provides its products and services to a large and diversified group of individual, corporate, and governmental clients. Morgan Stanley directed and brokered orders through the NYSE, including through their NYSE floor brokers.

34. Defendant UBS Securities LLC (`USB") is broker-dealer who directed and brokered orders through the NYSE, including through its NYSE floor brokers.

35. Defendant Credit Suisse Securities (USA) LLC ("CS Securities") is a broker- dealer who directed and brokered orders through the NYSE, including on behalf of its parent, additional defendant Credit Suisse Group, Inc., including through their NYSE floor brokers. CS

Securities is controlled by CS Group ("CS Group").

36. Defendant Jefferies Execution Services, Inc. ("Jefferies Execution") is a broker- dealer who, with controlling affiliates , directed and brokered orders through the NYSE, including through its NYSE floor brokers. It is controlled by the parent company Defendant

Jeffries Group, Inc. ("Jeffries Group" and collectively referred to as "Defendant Jefferies" or

"Jefferies").

37. Defendant Deutsche Bank Securities Inc. ("Deutsche Bank") is a broker-dealer who, with controlled affiliates, directed and brokered orders through the NYSE, including through its NYSE floor brokers.

38. Defendant Fidelity Investments ("Fidelity"), a privately held company, is the nation' s largest mutual fund provider. Fidelity Management & Research Co., the investment management division of Fidelity Investments, acts as the investment advisor to the company's

9 family of mutual funds. With its affiliated broker-dealer, additional Defendant National

Financial Services, Inc. ("National Financial"), directed and brokered orders through the NYSE, including through their NYSE floor brokers.

39. The defendants in paragraphs 31 through 38 above, in conjunction with the

"Intergrated Broker Defendants", are referred to herein as "Broker Defendants".

Co-Conspirators

40. Various individuals, partnerships, corporations and associations not named as defendants in this Complaint, have participated in the violations alleged herein and have performed acts and made statements in furtherance thereof.

The National Market System - Emphasis On Fair And Orderly Execution Of AD Orders

41. In 1975, Congress amended the Exchange Act to form the National Market

System, the purpose of which was to link all markets for securities into one national system.

Congress declared that the linking of all markets for securities will "foster efficiency, enhance competition, increase the information available to brokers, dealers, and investors, facilitate the offsetting of investors' orders, and contribute to best execution of such orders."

42. Although Congress set out broad principles to govern the development of a

National Market System, it did not dictate a specific form that it should take. Instead, Congress envisioned that competitive forces would shape the structure of our markets.

43. Section 11A of the Exchange Act, enacted as part of the Securities Act

Amendments of 1975 ("1975 Amendments"), sets forth Congress' findings and directs the SEC to facilitate the development of the National Market System. Specifically, Congress found that it is in the public interest and appropriate for the protection of investors and the maintenance of a fair and orderly market to assure:

10 (a) the economically efficient execution of securities transactions;

(b) fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets;

(c) the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities;

(d) the practicability of brokers executing investors' orders in the best market; and

(e) the opportunity for investors' orders to be executed without the participation of a dealer.

44. The National Market System enables its participants to discriminate among market centers, thus fostering competition. A recurring theme within the National Market

System is the ability of investors to achieve the best possible execution of their orders.

45. Congress recognized the essential role that the free flow of accurate securities pricing and order processing data play in creating a fair, orderly and competitive National

Market System. In fact, the essential facility of the National Market System is its centralized communication and reporting systems. The SEC recognized the importance of developing centralized communications and reporting systems even prior to the enactment of the National

Market System. For example, in 1972, the Commission published a Statement on the Future

Structure of the Securities Markets, describing the facilities of the future National Market System as follows:

The central market system we look toward ... would entail, among other things ...: 1. Implementation of a nationwide disclosure or market information system to make universally available price and volume in all markets and quotations from all market makers. 2. Elimination ofartificial impediments, created by exchange rules or otherwise, to dealing in the best available market. 3. Establishment of terms and conditions upon which any qualified broker-dealer can attain access to all exchanges ... [and] 4. Integration of third- marketfirms into the central market system.

11 See. & Exch. Comm'n., Statement on the Future Structure of the Securities Markets, 37 Fed.

Reg. 5286, 5287 (Mar. 14, 1972).

Fostering Quote Competition and the Real Time Exchange ofSecurities Pricing Data

46. Quote competition plays a paramount role in the maintenance of the National

Market System. Centralized real-time quote and inventory information transmission enables quote competition. The National Market System facilities are designed to make reliable quote information available via a communication network known as the Consolidated Quotations

System (or "CQS")

47. By its operation, the CQS is designed to create a common information environment within which reliable quotations drive quote competition between market centers.

The information environment created by the CQS was more than a helpful enhancement to competition; it was a presumptive driver of order flow. As the SEC noted, the CQS "should serve not only to facilitate but in most cases to require that a broker execute an order wherever the best price is obtainable." (emphasis added).

48. Each market center contributes its "consolidated best bid best offer" ("CBBO") to the CQS. The CQS displays the CBBOs from each market center. The best CBBO is referred to as the "national best bid best offer" ("NBBO").

49. The power to exercise control over order flow is directly derived from a market center's capacity to maintain its CBBO as either competitive with or controlling NBBO. The integrity of the NBBO is necessarily dependent upon the integrity of its components - i.e. the

CBBOs submitted by competing market centers.

50. Defendants have regularly invoked in public fora the necessity for that integrity and criticized competing market centers for the lack of equivalence between their effective

12 CBBO and NBBO. For example, the head of Goldman Sachs Equity division described the role of these interrelated concepts when he testified before Congress in 2004:

'As a general matter, we believe markets should befair, open and transparent. Competition withinfair and transparent markets should be based on providing value-added services such as better execution prices, enhanced liquidity, or sophisticated order handling capabilities. It should not be based on fees imposed on top ofthe posted quote in the NBBO.

From this perspective, the issue of access fees becomes relatively straightforward We believe that transparency can only be achieved if quotes comprising the SEC mandated national best bid and offer reflect the true and complete value ofthe transaction. Best execution obligations, the 11 Acl-5 rule, and the proposed trade-through rule have elevated the NBBO to a key role as the benchmarkfor measuring price and execution quality in the equity markets. For this reason, when it comes to the NBBO, we believe that "what you see should be what you get. " Access fees that hide behind a quote mean that the quote is not what it says it is. Ifwe are going to continue to use the NBBO as a benchmark for price discovery and best execution, then the SEC must ensure that the NBBO quote is an accurate representation ofprice.

Apartfrom these transparency concerns, we also believe that, for a quote to be part of the NBBO, it should be possible to execute against that quote in an efficient manner. In other words, in addition to being what it says it is, the NBBO should be available for immediate execution. Subjecting the quote to this requirement will help ensure the validity ofusing the NBBO as a benchmark "

Testimony of Matthew Lavieka, Goldman Sachs' Managing Director in Equities Division, SEC

Hearing on Regulation of NMS (April 21, 2004), available at http://www.sec. gov/rules/proposed/s71004/testimony/gsachsO42104.pdf

51. Transaction reporting plays a similar role as quote reporting. Transaction reports are transmitted to market participants via communication networks. Exchange Act Rule 1lAa3-

1 (the "Consolidated Tape Rule")(re-designated as National Market System Rule 601) imposes upon SROs the responsibility for maintaining an integrated transaction reporting system. In essence, "consolidated tapes" report not only transactions effected upon the New York Stock

13 Exchange and Amex, but also on regional exchanges and other venues where securities

otherwise listed on the New York Stock Exchange and Amex are executed.

Further Fostering Competition Through Monthly Disclosure ofExecution Quality

52. In or about April 2001, the SEC promulgated Rule I IAcl-5, otherwise known as

Dash 5, to force market centers to report monthly on the quality of executions on a stock-by-

stock basis. Dash 5 is intended to further investor ability to realize best execution within the

National Market System.

53. Dash-5 statistics are highly material to investors and slight differences in the

execution costs reported therein can have billions of dollars of impact. As NYSE President John

Thain observed:

"In today's world of pennies, there's nothing `de minimus' about two or three cents a share," Mr. Thain (CEO NYSE) testified at the Feb. 20 hearing. "When 1.7 billion shares are traded every day, a two-to-three cent a share worse execution quickly adds up to billions of dollars"

54. Dash 5 specifies disclosure of nine execution metrics designed by the SEC to

promote evaluation of how well orders are executed by the market centers competing. For

purposes of these metrics, execution quality is framed as the combined costs - in terms of (i) time departures experienced by customers measurable by the time duration until execution and

(ii) price departures measured by the difference in execution price from the displayed quotes at the time orders are submitted. The time of receipt of an order commences the time for which a market center is deemed responsible for an order directed to it for execution.

55. A key Dash- 5 metric is the average "effective" spread (in contrast to the average

„realized" spread). Average effective spread is calculated by comparing the execution price of an order with the midpoint of the consolidated NBBO at the time of order receipt. The larger the

14 effective spread, the higher the transaction costs for market and marketable limit orders in that security. The average effective spread is a comprehensive statistic that summarizes the extent to which market and marketable limit orders are given price improvement, executed at the quotes, and executed outside the quotes. The SEC considers effective spread a highly important and useful measure of the cost paid for execution of an order.

56. In addition to the effective spread, there are eight information elements required for market and marketable limit orders: (1) the cumulative number of shares of covered orders executed with price improvement; (2) for shares executed with price improvement, the share- weighted average amount per share that prices were improved; (3) for shares executed with price improvement, the share-weighted average period from the time of order receipt to the time of order execution; (4) the cumulative number of shares of covered orders executed at the quote; (5) for shares executed at the quote, the share weighted average of period of time of order receipt to the time of order execution; (6) the cumulative number of shares of covered orders executed outside the quote; (7) for shares executed outside the quote, the share-weighted average amount per share that prices were outside the quote; and (S) for shares executed outside the quote, the share-weighted average period from the time of order receipt to the time of order execution.

57. These metrics are essentially break-out metrics . That is, they reveal the major components comprising the average effective spread. Each of these break-out metrics helps broker-dealers and investors evaluate specific aspects of market center execution performance.

The design of these metrics is to provide a substantial basis to weigh any potential trade-offs between execution speed and execution price. For example, orders are classified based on whether they are "executed with price improvement," "executed at the quote," or "executed outside the quote." Such statistics are designed not only to help find the fastest executions at the

15 best prices for particular order sizes and categories, they also are indicative of the extent to which market centers, over time, are able to execute larger orders at prices equal to or better than the quotes. For these reasons, the SEC indicates the Dash 5 information should provide guidance into the volume of liquidity available at different market centers.

The Role ofRouting Brokers Within the National Market System

58. The information provided through the CQS, Consolidated Tape Rule and Dash 5 is not only utilized by investors but also by routing brokers who decide where to route orders placed by their clients-principals. All routing brokers owe their client-principals a duty of best execution, which requires the broker to use reasonable diligence to ascertain the best inter-dealer market to purchase or sell the subject security. Routing brokers create routing strategies (often using algorithms or programs) aimed at achieving best execution based upon their analysis of the information obtained through the CQS, Consolidated Tape Rule and Dash 5.

The New York Stock Exchange Is A Market Center Competing In The National Market

System

59. The New York Stock Exchange is comprised of members, a subset of which serve as its board of directors and control the Exchange.

60. Prior to becoming a public company, a New York Stock Exchange member firm was a registered broker-dealer organized as a corporation, a partnership or a limited liability company, in which at least one of the principal officers "owns a seat" on the exchange. Owning a seat on the New York Stock. Exchange enabled a person/entity to trade on the floor of the exchange. Owning a seat, however, required much more than simply being able to afford it (a single seat cost several million dollars). Prospective owners had to go through a stringent review

16 process and, once accepted, they were required to maintain high levels of compliance and ethics, as the New York Stock Exchange and governmental regulators constantly review members.

61. During the Class Period, two categories of member firms worked on the trading floor of the New York Stock Exchange, each playing a distinct role in the trade execution process: specialists and floor brokers. The role and function of each is described below.

Specialists

62. A specialist is a New York Stock Exchange member firm which facilitates the trading of a given stock. There are seven specialist firms. Each firm is assigned specific stocks, which it exclusively manages. One function of the specialist firms is to serve as an agent to execute orders in the stocks they manage by matching buy and sell orders, otherwise referred to as the process of managing the auction. The specialist firms are required to manage the auction process to maintain a fair and orderly market in each security under their management.

Specialist firms also act as principals and buy or sell securities from their own accounts to stabilize or provide liquidity in a stock they manage.3

Floor Brokers

63. A floor broker may act as either agent or principal. When acting as agent, a floor broker executes orders to buy or sell securities on behalf of a client for the client's benefit.

When acting as principal, a floor broker buys or sells securities from his firm's proprietary account for his firm's own benefit.

64. There are two main subsets of floor brokers: house brokers and independent brokers.

3 As part of the management process specialists are allowed to set a "spread" between the buy and sell prices that affect the profits they make through trading on their own account. 17 65. House brokers are employed by large, diversified broker-dealers, formerly known as "investment houses" or "banking houses." The house broker executes orders on behalf of his firm's customers as well as on behalf of his firm's own account.

66. Independent brokers are individuals, or "boutique" member firm employees, who provide execution services to house brokers, member or non-member broker-dealers. An independent broker's income is derived purely from commissions.

Optionsfor Routing Orders to the New York Stock Exchange

67. There are two main paths an order can take once routed to the New York Stock

Exchange: an order may go (1) to a broker on the floor of the exchange itself; or (2) into the electronic SuperDOT system.

68. As stated above, SuperDOT is intended to afford investors trading smaller amounts of stock access to the same market conditions in terms of quality, efficiency and competitiveness as the floor system utilized by members of the New York Stock Exchange and their large institutional investors.

69. SuperDOT is designed to facilitate order execution by routing them directly to the specialist who makes the market in the particular security. Because priority is given to orders of

2,100 shares or less, the SuperDOT system is supposed to allow for faster execution of the order and faster reporting of the trade.

70. The New York Stock Exchange boasts the supposed efficacy of the SuperDOT system, publicizing that "[i]t reliably meets ever-increasing demand, which currently stands at 20 million quotes, 50 million orders and 10 million reports daily."

(htt ://www.n se.cog / roductservices/n see uities/1095202040263.html). The benefit to

SuperDOT, according to the New York Stock Exchange is as follows: "facilitating the routing of

18 orders directly to the trading post, Superpot® provides significant contributions to the quality, efficiency and competitiveness of Exchange markets."

(hgp ://www. pyse.com/Frameset.html?diVIgyPagefILtt :IIa s.n se.com/commdata/PubeduMem os. nsf10/8525 6F34007OD CAD8 525 70ED 00516D29?OpenDocunzeut).

THE SECRET TWO TIER EXECUTION MARKET

71, The SuperDOT system became an immediate threat to the vitality of the floor market. It permitted routing directly to the Specialists bypassing floor brokers.

72. Members of the New York Stock Exchange reacted to protect their interest and collectively entered into a conspiracy to subvert execution of SuperDOT orders in favor of their own orders and primarily in favor of floor orders. Members of the New York Stock Exchange have outright admitted to SEC investigators their general willingness to "Screw the Dots" and

"[Expletive] the Dots".

73. During the Class Period, NYSE and the New York Stock Exchange members created and maintained two separate markets for executing orders on the New York Stock

Exchange: (1) a dominant, "insider" submarket comprised of trades executed on the floor of the exchange (the "Floor Submarket"); and (2) an inferior, "outsider" submarket comprised of

SuperDOT trades (the SuperDot Submarket). During the Class Period, NYSE and the New

York Stock Exchange members systematically subverted execution of SuperDOT orders for the benefit of members' own orders and the orders of the large institutional investors who pay the members large commissions.

74. Technology developed specifically for the Floor Submarket by Securities Industry

Automation Corporation (SIAC), a 75% owned subsidiary of the NYSE, enabled the Floor

Submarket to access information not available to investors using SuperDOT, including

19 quotations, market looks (sizing up of market interest which brokers use to advise trading desks), etc. Critically, this information system also gave Floor Brokers access to the SuperDOT orders, whereas investors using SuperDOT did not have similar access to orders placed by the Floor

Brokers.

75. The existence of these two separate execution markets has been confirmed through a number of means.

Confirmation By Confidential Informant

76. According to a confidential informant who worked in one specialists' New York

Stock Exchange floor operations from January 2000 through April 2004 (and who subsequently became a specialist himself on the AMEX), the Specialist Defendants allowed the Broker

Defendants to see the incoming SuperDOT orders. Armed with such information, the Broker

Defendants could devise their bids to subvert the incoming SuperDOT orders. According to the confidential informant, the Specialist Defendants and Broker Defendants also conspired to fill floor orders ahead of simultaneously placed SuperDOT orders, and the Specialist Defendants and

Broker Defendants even conspired to fill floor orders ahead of SuperDOT orders offering a better price than the filled floor order.

Statistical Confirmation of Timing and Execution Bias

77. On a cross-section of SuperDOT and floor trades in a given security, one would expect that the execution quality in both submarkets would be similar. To illustrate, if Investor

A, through SuperDOT, and Investor B, through the floor, simultaneously enter orders to buy

1,000 shares of ABC stock at the market, the existence of a fair and orderly market presumes that both orders would be filled at or about the same time and at or about the same price or that over a series of such orders, there would not be a statistically significant difference in the time and price

20 for execution of the orders. That simply is not the case on the New York Stock Exchange.

Rather, the execution of SuperDOT orders is intentionally manipulated to benefit floor orders and subvert SuperDOT orders.

78. The manipulation of SuperDOT orders at the time of execution is illustrated through analysis of the average execution time of two classes of SuperDOT orders: (1) market orders executed at prices better than quotes (i.e., with price improvement) and (2) market orders executed at prices worse than quotes (i.e., outside NBBO). In the Dash-5 database, these average execution times are named as (1) AXSPJ (Average Execution times for Shares with Price

Improvement) and (2) ARSON (Average Execution times for Shares executed Outside implied

NBBO).

79. Random frictions within the execution process could produce differences between these average times on a market-wide basis and the analogous averages for SuperDOT orders.

However, as long as the frictions are random, it can be expected that approximately half the

SuperDOT market orders with price improvement would have an AX times that are lower than the market as a whole (i.e., quicker execution) whereas the other half would be higher than the market as a whole (i.e., slower execution).

80. That is not the case. Statistical analysis demonstrates that timing bias was not the result of random friction in the market but rather the result of intentional manipulation.

81. The statistical analysis compares the results for Sea Carriers (which represented approximately 20% of the Dash 5 orders in the stocks which Sea Carriers traded and therefore may serve as a proxy for the SuperDOT market as a whole) with the Dash 5 results (which is a proxy for the market as a whole). The following Contingency Table represents the experience

21 (in teens of AXSPI and AXSON) of the market orders by Sea Carriers in the 51 stocks within the S&P 100 in which Sea Carriers traded in June 2003:

Continency Table AXSPI AXSON (with price (outside improvement _N BO 9 of stocks with faster execution than Dash 5 averse 10 36 # of stocks with slower execution than Dash 5 averse 41 15

82. The data shows odd results for both subsets - in 41 of the 51 stocks, when there was price improvement, Sea Carriers' (SuperDOTs') execution time was slower than the average in Dash 5 (the market as a whole), while in 36 of the 51 stocks, when there was execution outside NBBO, the execution time for Sea Carriers (SuperDOTs) was faster than the average in

Dash 5 (the market as a whole). Not only is the timing bias (departure from the average) noteworthy, but the direction of the bias is counter-intuitive; logically, an investor would be more likely to receive an execution within NBBO if their order was executed more quickly

(before the market bid and ask prices moved significantly).

83. The likelihood of this timing bias being mere coincidence or statistically noise is zero. In fact, the assertion of the existence of a timing bias has a corresponding "null hypothesis"4 (no timing bias) which can be rejected with absolute confidence across the board.

4 In statistics, a null hypothesis is a hypothesis set up to be nullified or refuted in order to suggest an alternative hypothesis. 22 84. For orders executed with price improvement, i.e. the favorable orders, the null hypothesis can be rejected with a probability of 99.99% based upon the results shown in the

Contingency Table above.

85. For orders executed outside the consolidated best bid and offer, i.e. unfavorable orders, the null hypotheses can be rejected with a probability of 99.70% based upon the results shown in the Contingency Table above.

86. Also, as to the probability that such combined discrepancies between observed time departures will nonetheless be the shown as the consequence of some mechanism inducing equal delay on a non-biased basis can also be rejected with a probability of 99.99% based upon the results shown in the Contingency Table above.

87. The statistical patterns observed in the June 2003 data reoccur each and every month in 2003 and 2004.

Empirical and Statistical Evidence That SuperDOT Orders Are Not Provided the Same Access To Quoted Orders as Floor Orders

S8. Empirical evidence also shows that Defendants' two-tier system causes

SuperDOT Orders to be filled outside of NBBO a significant portion of the time.

89. In order to assess whether orders are filled within the best bid and best offer ranges, a comparison was made between the Sea Carriers' data concerning its orders (as representative of the SuperDOT customers ) and data released by National Financial Services,

LLC ("NFS "), which trades on behalf of Fidelity (the largest trader of shares on the New York

Stock Exchange - between 5% and 10% of total volume - and a suitable proxy for activities of

Floor Brokers generally).

90. The data shows that during June 2003 99.4% of NFS floor orders executed within

NBBO compared to only 74.97% of Sea Carriers (SuperDOT) orders.

23 91. That statistic becomes even more remarkable upon further analysis of Sea

Carriers' (the SuperDOTs') orders under 500 shares, as smaller orders should most logically execute fastest and within. NBBO because they are most likely to be within the advertised depth

(number of shares posted for purchase or sale in posted bid/ask quotes). These small (under 500 share) SuperDOT orders execute outside of NBBO almost 30% of the time, execute outside of quotes when within the depth quoted by specialists a stunning 22% of time, and execute outside of quotes even when the order is smaller than the quoted depth an even more stunning 15% of time.

92. The foregoing leads to one inescapable conclusion that SuperDOT Orders are not provided the same access to the orders comprising the NBBO as floor orders.

Empirical Evidence ofInformation Bias

93. One of the primary reasons why SuperDOT orders are not provided with the same access to the orders comprising the NBBO is that the New York Stock Exchange and its members are posting illusory or false quotes.

94. In June 2003, at least 11,500 orders of sizes less than the quoted depth executed outside the posted quote despite the fact that no other execution occurred between the placement and execution of the order. In other words, the market did not move away from these orders because other orders were filled. There is simply no reason that a market order for a number of shares below the listed depth should not sell within the listed prices. Yet that occurred 11,500 times in June 2003 alone, and the pattern repeated itself throughout the remainder of the Class

Period.

95. Again, the foregoing cannot be explained as random frictions in the market. The total number of these trades, over 11,500 identified around Sea Carriers orders in June 2003

24 alone, is too large for this to be due to technical problems in the trading system or data errors as

Sea Carriers traded approximately 20% of all Dash-5 orders.

96. These trades, where the order size was within the quoted depth but the execution was outside the quoted price, with no intervening trade to explain the price movement, are inconsistent with the execution strategies disclosed by the New York Stock Exchange and its members.

Statistical Comparison Between SuperDOT and Floor Execution

97. National Financial Services, LLC ("NFS") is a subsidiary of Fidelity Investments

(the largest customer of the New York Stock Exchange, regularly trading between 5% and 10% of the exchange ' s total volume) that operates a brokerage on the New York Stock Exchange floor.

98. A comparison of the execution received by Sea Carriers (SuperDOT) orders and

NFS' floor orders during the month of June 2003 revealed:

Trades Executed NFS Floor Trades Sea Carriers Sy erDOT At or within NBBO 99.4% 74,97% Outside NBBO 0.6% 25.03% Within 5 seconds of order 71.3% N/A placement Within 10 seconds of order 83.2% 54.49% placement Average effective spread $0.012 $0.0208

99. In sum, Sea Carriers' SuperDOT execution performance lags floor execution performance in every meaningful measure of execution quality. It lags in timing of execution. It lags in executions within NBBO. On the other hand, it leads in the dubious distinction of executions outside of NBBO, where SuperDOT orders are executed outside of NBBO over 25% of the time, whereas floor orders account for less than 1 %, or .6% of the time.

25 100. The effects of the discrimination suffered by Sea Carriers' SuperDOT orders can be measured not only in terms of the executions outside NBBO, but also in terms of the difference in effective spreads ("e-spreads") between NFS' floor orders and Sea Carriers'

SuperDOT orders.

101. As explained earlier, the e-spread is meant to capture the statistical "cost" of doing business in a market, such as the New York Stock Exchange. The lower the e-spread, the greater the advantage to the customer; the higher the e-spread, the greater the disadvantage to the customer. The SEC views e-spread as the best means of evaluating execution quality because it represents the additional per-share cost an investor paid to transact business in that market.

102. Sea Carriers paid $0.01 more per share to buy and sell shares . To echo NYSE

President John Thain's statement quoted earlier, in today's world, a penny worse execution quickly adds up. In this case, it adds up to a billion dollars extra paid each year by SuperDOT users.

CLASS ACTION ALLEGATIONS

103. Sea Carriers brings this action pursuant to Federal Rule of Civil Procedure 23 on its own behalf and as a representative of all public investors who placed market orders to purchase or sell New York Stock Exchange-listed securities via SuperDOT during the Class

Period. Excluded from the Class are Defendants; any officer, director or partner of the

Defendants; members of Defendants' immediate families; Defendants' legal representatives, heirs, successors and/or assigns; and any entity in which Defendants have or had a controlling interest.

26 104. The members of the Class are so numerous that joinder of all members is impracticable. The exact number of Class Members is unknown and can only be ascertained through proper discovery, although this number is estimated to be in the millions.

105. Sea Carriers' claims are typical of the claims of Class Members because all members were damaged by the same wrongful conduct alleged herein.

106. Sea Carriers will fairly and adequately protect the interests of the Class, and Sea

Carriers' interests in this action is consistent with, and not antagonistic to, the interests of the

Class Members. In addition, Sea Carriers is represented by attorneys who are experienced and competent in the prosecution of class actions and securities and antitrust litigations.

107. Common questions of law and fact exist as to all Class Members and predominate over any questions solely affecting individual Class Members. Among the common questions of law and fact are:

(a) whether defendants created and maintained two separate submarkets for executing market orders within the New York Stock Exchange;

(b) whether defendants made material misrepresentations to the Class;

(c) whether defendants' actions were manipulative or deceptive conduct in violation of Section 10(b)(5);

(d) whether defendants and their co-conspirators engaged in a combination or conspiracy to raise, fix and maintain the costs of trading on the New York Stock Exchange via SuperDOT at supra-competitive levels;

(e) whether defendants improperly used monopoly power;

(f) whether the actions of the defendants alleged herein violated Sections 1 and/or 2 of the Sherman Act, and /or Section 2(c) of the Robinson-Patman Price Discrimination Act;

27 (g) whether defendants took affirmative steps to conceal the combination or conspiracy alleged herein;

(h) whether the improper actions of Defendants caused damages to the Class, and if so, the appropriate measure of damages;

(i) whether Sea Carriers and the Class Members are entitled to declaratory and/or injunctive relief.

108. Class action treatment is superior to other available methods, if any, for the fair and efficient adjudication of this controversy. Such treatment will permit a large number of similarly situated persons to prosecute their common claims in a single forum simultaneously, efficiently and without the duplication of effort and expenses that numerous individual actions would involve. Further, as the damages suffered by most individual Class Members may be relatively small, the expenses and burdens associated with individual litigations against large, corporate defendants would make it virtually impossible for these Class Members to individually redress the wrongs done to them.

109. There will be no significant difficulties in managing this action as a class action.

The information required to manage this action - i.e, discern class membership and attribute damages sustained by every class member - is available within what is known as the

Consolidated Equity Audit Trial Act or "CAUD" and System Order Data or "SOD" data maintained by the New York Stock Exchange and its members. A computer program can be devised to analyze the CAUD data to identify every trade affected and accomplish both tasks.

110. Defendants have acted upon grounds generally applicable to the entire Class, thereby making final injunctive relief or corresponding declaratory relief appropriate with respect to the Class as a whole.

INTERSTATE TRADE AND COMMERCE

28 111. The trade and commerce relevant to this class action is the purchase and sale of

New York Stock Exchange-listed securities via SuperDOT.

112. In the flow of interstate commerce, during each business day throughout the Class

Period, Sea Carriers and the Class Members, who are disbursed throughout the United States, placed market orders with brokers, including but not limited to Defendants and their co- conspirators , to purchase and/or sell New York Stock Exchange-listed securities on the New

York Stock Exchange via SuperDOT.

113. During the Class Period, the Defendants and their co-conspirators, who were equally disbursed throughout the United States, executed billions of trades for SuperDOT customers across state lines in an uninterrupted and continuous flow of interstate trade and commerce.

114. The activities of Defendants and their co-conspirators, as described herein, were within the flow of interstate trade and commerce, had substantial effect on interstate trade and commerce, and unreasonably restrained interstate trade and commerce.

115. Among other unreasonable restraints on interstate trade and commerce,

Defendants' combination and conspiracy has misrepresented and raised transaction costs paid by

Sea Carriers and Class Members to trade in New York Stock Exchange-listed securities via

SuperDOT, and has deprived Sea Carriers and Class Members of the benefits of free and open interstate competition between and among market makers.

FIRST CLAIM FOR RELIEF

For Relief Under Section 2 of the Sherman Act (Monopolization)

116. Plaintiffs repeat and re-allege each and every allegation contained in the above paragraphs as if fully set forth herein.

29 117. Plaintiffs bring this claim against Defendant NYSE. Plaintiffs bring this claim

under Sections 4 and 16 of the Clayton Act, 15 U.S.C. § § 15 and 26, for the injuries sustained by

Plaintiffs and members of the Class arising from NYSE's violation of Section Two of the

Sherman Act, 15 U.S.C. § 2.

118. Throughout the Class Period, Defendant NYSE engaged in anticompetitive

conduct that allowed it to obtain and maintain monopoly power in the market for execution of

trades in the National Market System ("NMS") causing Plaintiffs and the Class to suffer

damages, in violation of Section Two of the Sherman Act, 15 U.S.C. § 2.

119. During the Class Period, Defendant NYSE had monopoly power in the above

market, controlling a market share of 80% or greater of the market for execution services for

securities that could be traded on the New York Stock Exchange floor. Indeed, during the Class

Period, officials of the NYSE openly bragged about the competitive dominance achieved by the

NYSE over listed issues. Brown, Mulherin & Weidenmeir, "Competing with the NYSE" (March

2006) (available at www.stem.nyu.edu/eco/semiriars/weidenmer.pdf).

120. Under the NMS, each of the 2,764 (as of December 31, 2006) listed stocks traded

on the New York Stock Exchange could also be traded in other market centers. As set forth in

above, the integrity of the National Market System relies upon the persons directing orders to achieve best execution being given accurate information that allows them to select the most efficient National Market Center to execute any particular trade.

121. Defendant NYSE obtained and maintained this dominant market share through various artifices that misled the public concerning the quality of trade executions available through the New York Stock Exchange . By misleading the public and routing brokers as to the quality of the trade executions available through the New York Stock Exchange, Defendant

30 NYSE prevented investors and routing brokers from obtaining the benefit of seeking better execution in alternate market centers, drove to its own trading floor trade volume that could and should more efficiently have been executed in an alternate market, and prevented the development of viable alternative execution venues which could (with greater participation) develop a competitive network for execution services.

Illusory Quotes

122. Defendant NYSE misled the public concerning the quality of the trade executions available through the New York Stock Exchange by issuing illusory quotes. Defendant NYSE attracted orders to the New York Stock Exchange and away from alternative venues by engaging in quote competition with other national market centers by posting bid and ask quotes and the number of shares available at that price (the "quote depth") as part of its CBBO.

123. Specifically, the New York Stock Exchange would post CBBO bid and ask quotes with extremely low spreads of either one or two cents in order to induce investors into believing that the New York Stock Exchange had a high concentration of orders capable of being matched without dealer intervention and under auction-like pricing conditions.

124. However, in violation of the Firm Quote Rule, Exchange Act Rule 11 Ac 1-1(c),

Defendant NYSE's quotes frequently were false and misleading. The requirements of the Firm

Quote Rule are designed to require the New York Stock Exchange, as well as all members

(including floor brokers and specialists), to present actual, reliable orders at the represented prices and sizes. However, the quotes used by members to attract orders away from competing venues included an appreciable subset where the depth associated with the posted prices were simply illusory.

31 125. Across a broad range of stocks, orders which were induced into the NYSE were executed outside of NBBO. Depending on the stock, Sea Carriers' orders were executed outside of the NBBO used to induce them between 26% and 3 8% or more of the time. The total number of Sea Carriers executions outside of NBBO were substantially higher than the executions outside of NBBO for users of floor brokers. Empirical analysis of Plaintiffs' market orders reveals that 21.8% of Plaintiffs' SuperDOT orders were processed at a bid or offer price outside of the New York Stock Exchange CBBO posted at the time of the order. Indeed, empirical analysis demonstrates that for June 2003, about 30% of small orders (1-499 shares) traded outside the New York Stock Exchange CBBO quoted prices.

126. Moreover, a substantial number of these orders were attracted with low spreads of

$0.01 or $0.02 - lower than the customers' effective spreads.

Misleading Dash-5 Statistics

127. Defendant NYSE also created this dominant market share through the issuance of

"Dash-5" reports (as discussed at ¶152-57) that misled the public concerning the quality of trade executions available through the New York Stock Exchange.

128. As discussed above at 1152-57, SEC Rule 605, 17 C.F.R. §242.605 ("Dash-5") requires market centers like the New York Stock Exchange to report monthly on the aggregate quality of executions of covered trades (including but not limited to SuperDOT trades) in each stock during that month.

129. However, Defendant NYSE's Dash-5 reports provided misleading information that attracted order flow to the New York Stock Exchange and away from alternative market centers. Defendant NYSE's Dash-5 reports, based upon the New York Stock Exchange's aggregate execution quality in each stock over the relevant month, failed to disclose that

32 SuperDOT trades were discriminated against and systematically received worse executions than the aggregate results set forth in the Dash-5 report.

130. Defendant NYSE's Dash-5 Reports similarly conceal the extensive execution time bias that SuperDOT orders suffer as compared with other covered orders executed on the

New York Stock Exchange, as discussed at 1178-103.

Misleading Statements

131. Defendant NYSE further attracted monopoly order flow by repeatedly and improperly asserting (despite the undisclosed above biases against SuperDOT orders) that the

New York Stock Exchange "provides an efficient, fair and secure marketplace for investors," that "[i]nvestors already get the best prices at the NYSE," and that " [i]nvestors are entitled to the best possible price no matter where their orders originate or are executed." See ¶f226, 231, 232 infra.

132. Defendant NYSE fraudulently concealed its illegal monopolization conduct from the public. As discussed above, Defendant NYSE repeatedly proclaimed before and throughout the Class Period that the New York Stock Exchange provided a "Fair" and "efficient" market.

Moreover, on February 13, 2002, in a press release entitled "NYSE Appoints Special Board

Committee to Advise on Corporate Governance: NYSE Corporate Accountability and Listing

Standards Committee," the NYSE stated:

"It is imperative that we reinforce trust and confidence in our publicly traded companies and in our markets," said NYSE Chairman and CEO Dick Grasso. "Investors demand and deserve nothing less than timely and accurate disclosure, sound corporate governance, and an established set of practices that ensure transparency and integrity. This is in the best interests of investors, issuers and the markets."

33 133. Similarly, on December 20, 2002, on the television show Nightly Business

Report, Richard Grasso, NYSE Chairman and CEO, stated in response to the backlash caused by

the analyst scandal:

The American Public, some 8.5 million investors strong, don't expect the guarantee of a profit when they enter risk-taking in our capital system. What they expect, and what we should absolutely be in a position to deliver always, is a guarantee that their interests will be held first and primary to the interests of those in the intermediation business.

134. In their May 2003 newsletter, the NYSE likewise stated: "Protecting investors is

the NYSE's highest priority.... through aggressive surveillance and enforcement of our rules

and the federal securities laws, our staff works to prevent any individual or firm from betraying

our customers' trust and vigorously seeks out and punishes those who do."

135. As a result of Defendant NYSE's improper conduct, Defendant NYSE attained

and maintained an illegal monopoly in the market for providing trade execution services.

SECOND CLAIM FOR RELIEF

For Relief Under Section 2 of the Sherman Act Cons irac to Monopolize)

136. Plaintiffs repeat and re-allege each and every allegation contained in the above

paragraphs as if fully set forth herein.

137. Plaintiffs bring this claim against Defendants NYSE, each of the Specialist

Defendants, and each of the Broker Defendants (the "Monopoly Defendants"). Plaintiffs bring this claim under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, for the injuries

sustained by Plaintiffs and members of the Class arising from Defendants' violation of Section

Two of the Sherman Act, 15 U.S.C. § 2.

138. Throughout the Class Period, the Monopoly Defendants acted in concert with the deliberate intent to allow Defendant NYSE to attain and maintain an unlawful monopoly in the

34 market for execution of trades in the National Market System, in violation of Section Two of the

Sherman Act, 15 U.S.C. § 2.

139. Each of the Monopoly Defendants committed overt acts in furtherance of this conspiracy. Specifically, each of the Monopoly Defendants is responsible by federal regulation for the bid and offer prices and sizes communicated to and by the exchange as part of the New

York Stock Exchange's CBBO (Firm Quote Rule, Exchange Act Rule I lAcl-l(c)). However, as set forth in 11123-27 the New York Stock Exchange's CBBO quotes that were used to attract monopoly market share to the NSYE were false and misleading.

140. Defendant NYSE also purported to delegate to the Specialist Defendants its reporting duties under Dash-S. However, as set forth in TT 128-31 the New York Stock Exchange

Dash-5 reports were false and misleading.

141. The Monopoly Defendants fraudulently concealed their illegal conduct from investors. As detailed in ¶" 224-255infra, the Monopoly Defendants repeatedly proclaimed before and throughout the Class Period that all orders on the New York Stock Exchange were treated fairly and efficiently. Moreover, each of the Specialist Defendants in 2004 committed pursuant to publicly-filed SEC cease-and-desist orders to take steps to ensure that all orders, including SuperDOT orders, were treated fairly and efficiently.

142. As a result of the Monopoly Defendants' improper conduct, Defendant NYSE attained and maintained an illegal monopoly in the market for providing trade execution services.

THIRD CLAIM FOR RELIEF

Sherman Act 1. Claim Against the LaBranche Conspiracy Defendants

143. Plaintiffs repeat and re-allege each and every allegation contained in the above paragraphs as if fully set forth herein.

35 144. Plaintiffs bring this claim against Defendants LaBranche, and the Broker

Defendants (the "LaBranche Conspiracy Defendants"). Plaintiffs bring this claim under Sections

4 and 16 of the Clayton Act, 15 U.S.C. § 15 and 26, for the injuries sustained by Plaintiffs and members of the Class arising from Defendants' violations of Section One of the Sherman Act, 15

U.S.C. § 1.

145. Throughout the Class Period, the LaBranche Conspiracy Defendants and their co- conspirators engaged in a continuing combination and conspiracy in unreasonable restraint of trade and commerce in the pricing of trading execution services for the stocks assigned to

LaBranche as specialist in violation of Section One of the Sherman Act, 15 U.S.C. § 1.

146. This combination and conspiracy consisted of an agreement, understanding and concert of action among the LaBranche Conspiracy Defendants and their co-conspirators, the substantial terms of which were to discriminate against SuperDOT customers in the execution of their trades, and thereby to raise, stabilize and maintain at artificially high levels the cost to

SuperDOT customers of executing trades on the New York Stock Exchange in the stocks handled by LaBranche as specialist.

147. LaBranche gave execution preference to floor broker orders over SuperDOT orders. Some or all of the stocks assigned to Defendant LaBranche as the exchange market maker or "specialist," including, at a minimum, the stocks listed as such on Table I hereto (the

"LaBranche Managed Issues"), were the object of this anticompetitive, collusive and unlawful conduct. Corroboration of the particular impact upon and the reasonableness of these assessments of the economic of disadvantages to SuperDOT market orders in the LaBranche

Managed Issues can be calculated using execution performance statistics of Madoff, a competing market-maker in the identical LaBranche Managed Issues.

36 148. By giving preferential treatment to floor broker orders over SuperDOT orders,

LaBranche violated, inter alia, Rules 70, 71, and 72 of the New York Stock Exchange

concerning the order of trades, and thereby violated the Firm Quote Rule, SEC Rule I l Ac l -1(c),

and Section 11 A(c)(1) of the Exchange Act.

149. As set forth in IT77 above, Plaintiffs' Confidential Informant reported that the

Broker Defendants knew that LaBranche was improperly favoring floor broker trades over

SuperDOT trades. By conducting trades with LaBranche under this illicit two-tier market

system, the Broker Defendants violated the Firm Quote Rule, SEC Rule 11Ac1-1(c), and Section

11A(c)(1) of the Exchange Act.

150. The LaBranche Conspiracy Defendants and co-conspirators intended and

expected, at the time they devised, implemented and maintained their anticompetitive

conspiracies alleged herein, that their conspiracy would affect the execution quality, and thus

cost, provided to SuperDOT orders.

151. As a result of the LaBranche Conspiracy Defendants' misconduct, Plaintiffs' and

the Class Members' trades placed through SuperDOT received inferior execution as compared to

trades placed through the Broker Defendants, with the result that the cost of Plaintiffs and the

Class' Members trades was improperly inflated.

152. Throughout the Class Period, the LaBranche Conspiracy Defendants and their co-

conspirators intended to and did affirmatively and fraudulently conceal their wrongful conduct and the existence and operation of the two-tiered market system from Plaintiffs and other members of the Class, as set forth in ¶ 133, 142 above.

FOURTH CLAIM FOR RELIEF

Sherman Act 1 Claim. Against the Spear Leads Cons irac Defendants

37 153. Plaintiffs repeat and re-allege each and every allegation contained in the above paragraphs as if fully set forth herein.

154. Plaintiffs bring this claim against Defendants Spear Leads and the Broker

Defendants (the "Spear Leads Conspiracy Defendants"). Plaintiffs bring this claim under

Sections 4 and 16 of the Clayton Act, 15 U. S.C. §§ 15 and 26, for the injuries sustained by

Plaintiffs and members of the Class arising from Defendants' violations of Section One of the

Sherman Act, 15 U.S.C. § 1.

155. Throughout the Class Period, the Spear Leads Conspiracy Defendants and their co-conspirators engaged in a continuing combination and conspiracy in unreasonable restraint of trade and commerce in the pricing of trading execution services for the stocks assigned to Spear

Leads as specialist in violation of Section One of the Sherman Act, 15 U.S.C. § 1.

156. This combination and conspiracy consisted of an agreement, understanding and concert of action among the Spear Leads Conspiracy Defendants and their co-conspirators, the substantial terms of which were to discriminate against SuperDOT customers in the execution of their trades, and thereby to raise, stabilize and maintain at artificially high levels the cost to

SuperDOT customers of executing trades on the New York Stock Exchange in the stocks handled by Spear Leads as specialist.

157. Spear Leads gave execution preference to floor broker orders over SuperDOT orders. Some or all of the stocks assigned to Defendant Spear Leads as the exchange market maker or "specialist," including, at a minimum, the stocks listed as such on Table 1 hereto {the

"Spear Leads Managed Issues"), were the object of this anticompetitive, collusive and unlawful conduct. Corroboration of the particular impact upon and the reasonableness of these assessments of the economic of disadvantages to SuperDOT market orders in the Spear Leads

38 Managed Issues can be calculated using execution performance statistics of Madoff, a competing market-maker in the identical Spear Leads Managed Issues.

158. By giving preferential treatment to floor broker orders over SuperDOT orders,

Spear Leads violated, inter alia, Rules 70, 71, and 72 of the New York Stock Exchange concerning the order of trades, and thereby violated the Firm Quote Rule, SEC Rule 11Ac1-1(c), and Section 11A(c)(1) of the Exchange Act.

159. By conducting trades with Spear Leads under this illicit two-tier market system, the broker defendants violated the Firm Quote Rule, SEC Rule l l Act - l (c), and Section

11 A(c)(1) of the Exchange Act.

160. The Spear Leads Conspiracy Defendants and co-conspirators intended and expected, at the time they devised, implemented and maintained their anticompetitive conspiracies alleged herein, that their conspiracy would affect the execution quality, and thus cost, provided to SuperDOT orders.

161. As a result of the Spear Leads Conspiracy Defendants' misconduct, Plaintiffs and the Class Members' trades placed through SuperDOT received inferior execution as compared to trades placed through the Broker Defendants, with the result that the cost of Plaintiffs and the

Class' Members trades was improperly inflated.

162. Throughout the Class Period, the Spear Leads Conspiracy Defendants and their co-conspirators intended to and did affirmatively and fraudulently conceal their wrongful conduct and the existence and operation of the two-tiered market system from Plaintiffs and other members of the Class, as set forth in ' 133, 142 above.

FIFTH CLAIM FOR RELIEF

Sherman Act I Claim Against the Bear Wagner Conspiracy Defendants

39 163. Plaintiffs repeat and re-allege each and every allegation contained in the above paragraphs as if fully set forth herein.

164. Plaintiffs bring this claim against Defendants Bear Wagner and the Broker

Defendants (the "Bear Wagner Conspiracy Defendants"). Plaintiffs bring this claim under

Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, for the injuries sustained by

Plaintiffs and members of the Class arising from. Defendants' violations of Section One of the

Sherman Act, 15 U.S.C. § 1.

165. Throughout the Class Period, the Bear Wagner Conspiracy Defendants and their co-conspirators engaged in a continuing combination and conspiracy in an unreasonable restraint of trade and commerce in the pricing of trading execution services for the stocks assigned to

Bear Wagner as specialist in violation of Section One of the Sherman Act, 15 U.S.C. § 1.

166. This combination and conspiracy consisted of an agreement, understanding and concert of action among the Bear Wagner Conspiracy Defendants and their co-conspirators, the substantial terms of which were to discriminate against SuperDOT customers in the execution of their trades, and thereby to raise, stabilize and maintain at artificially high levels the cost to

SuperDOT customers of executing trades on the New York Stock Exchange in the stocks handled by Bear Wagner as specialist.

167. Bear Wagner gave execution preference to floor broker orders over SuperDOT orders. Some or all of the stocks assigned to Defendant Bear Wagner as the exchange market maker or "specialist," including, at a minimum, the stocks listed as such on Table 1 hereto (the

"Bear Wagner Managed Issues"), were the object of this anticompetitive, collusive and unlawful conduct. Corroboration of the particular impact upon and the reasonableness of these assessments of the economic of disadvantages to SuperDOT market orders in the Bear Wagner

40 Managed Issues can be calculated using execution performance statistics of Madoff, a competing market-maker in the identical Bear Wagner Managed Issues.

168. By giving preferential treatment to floor broker orders over SuperDOT orders,

Bear Wagner violated, inter alia, Rules 70, 71, and 72 of the New York Stock Exchange concerning the order of trades, and thereby violated the Firm Quote Rule, SEC Rule llAcl-l(c), and Section 11A(c)(1) of the Exchange Act.

169. By conducting trades with Bear Wagner under this illicit two-tier market system, the Broker Defendants violated the Firm Quote Rule, SEC Rule IlAcl-1(c), and Section

11 A(c)(1) of the Exchange Act.

170. The Bear Wagner Conspiracy Defendants and co-conspirators intended and expected, at the time they devised, implemented and maintained their anticompetitive conspiracies alleged herein, that their conspiracy would affect the execution quality, and thus cost, provided to SuperDOT orders.

171. As a result of the Bear Wagner Conspiracy Defendants' misconduct, Plaintiffs and the Class Members' trades placed through SuperDOT received inferior execution as compared to trades placed through the Broker Defendants, with the result that the cost of

Plaintiffs and the Class' Members trades was improperly inflated.

172. Throughout the Class Period, the Bear Wagner Conspiracy Defendants and their co-conspirators intended to and did affirmatively and fraudulently conceal their wrongful conduct and the existence and operation of the two-tiered market system from Plaintiffs and other members of the Class, as set forth in IT 133, 142 above.

SIXTH CLAIM FOR RELIEF

Sherman Act 1 Claim Against the Fleet Conspiracy Defendants

41 173. Plaintiffs repeat and re-allege each and every allegation contained in the above

paragraphs as if fully set forth herein.

174. Plaintiffs bring this claim against Defendants Fleet and the Broker Defendants

(the "Fleet Conspiracy Defendants"). Plaintiffs bring this claim under Sections 4 and 16 of the

Clayton Act, 15 U.S.C. §§ 15 and 26, for the injuries sustained by Plaintiffs and members of the

Class arising from Defendants ' violations of Section One of the Sherman Act, 15 U.S.C. § 1.

175. Throughout the Class Period, the Fleet Conspiracy Defendants and their co-

conspirators engaged in a continuing combination and conspiracy in unreasonable restraint of

trade and commerce in the pricing of trading execution services for the stocks assigned to Fleet

as specialist in violation of Section One of the Sherman Act, 15 U.S.C. § 1.

176. This combination and conspiracy consisted of an agreement, understanding and

concert of action among the Fleet Conspiracy Defendants and their co-conspirators, the

substantial terms of which were to discriminate against SuperDOT customers in the execution of

their trades, and thereby to raise, stabilize and maintain at artificially high levels the cost to

SuperDOT customers of executing trades on the New York Stock Exchange in the stocks

handled by Fleet as specialist.

177. Fleet gave execution preference to floor broker orders over SuperDOT orders.

Some or all of the stocks assigned to Defendant Fleet as the exchange market maker or

"specialist," including, at a minimum, the stocks listed as such on Table 1 hereto (the "Fleet

Managed Issues"), were the object of this anticompetitive, collusive and unlawful conduct.

Corroboration of the particular impact upon and the reasonableness of these assessments of the economic of disadvantages to SuperDOT market orders in the Fleet Managed Issues can be

42 calculated using execution performance statistics of Madoff, a competing market-maker in the identical Fleet Managed Issues.

178. By giving preferential treatment to floor broker orders over SuperDOT orders,

Fleet violated, inter alia, Rules 70, 71, and 72 of the New York Stock Exchange concerning the order of trades, and thereby violated the Firm Quote Rule, SEC Rule 11Ac1-1(c), and Section

1 lA(c)(1) of the Exchange Act.

179. By conducting trades with Fleet under this illicit two-tier market system, the broker defendants violated the Firm Quote Rule, SEC Rule 11Ac1-1 (c), and Section 1IA(c)(1) of the Exchange Act.

180. The Fleet Conspiracy Defendants and co-conspirators intended and expected, at the time they devised, implemented and maintained their anticompetitive conspiracies alleged herein, that their conspiracy would affect the execution quality, and thus cost, provided to

SuperDOT orders.

181. As a result of the Fleet Conspiracy Defendants' misconduct, Plaintiffs and the

Class Members' trades placed through SuperDOT received inferior execution as compared to trades placed through the Broker Defendants, with the result that the cost of Plaintiffs and the

Class' Members trades was improperly inflated.

182. Throughout the Class Period, the Fleet Conspiracy Defendants and their co- conspirators intended to and did affirmatively and fraudulently conceal their wrongful conduct and the existence and operation of the two-tiered market system from Plaintiffs and other members of the Class, as set forth in IT_ above [monopoly fraudulent concealment section].

SEVENTH CLAIM FOR RELIEF

Sherman Act I Claim Against the SIG Specialists Cons irac Defendants

43 183. Plaintiffs repeat and re-allege each and every allegation contained in the above paragraphs as if fully set forth herein.

184. Plaintiffs bring this claim against Defendants SIG Specialists and the Broker

Defendants (the "SIG Specialists Conspiracy Defendants"). Plaintiffs bring this claim under

Sections 4 and 16 of the Clayton Act, 15 U.S.C. § 15 and 26, for the injuries sustained by

Plaintiffs and members of the Class arising from Defendants' violations of Section One of the

Sherman Act, 15 U.S.C. § 1.

185. Throughout the Class Period, the SIG Specialists Conspiracy Defendants and their co-conspirators engaged in a continuing combination and conspiracy in unreasonable restraint of trade and commerce in the pricing of trading execution services for the stocks assigned to SIG

Specialists as specialist in violation of Section One of the Sherman Act, 15 U.S.C. § 1.

186. This combination and conspiracy consisted of an agreement, understanding and concert of action among the SIG Specialists Conspiracy Defendants and their co-conspirators, the substantial terms of which were to discriminate against SuperDOT customers in the execution of their trades, and thereby to raise, stabilize and maintain at artificially high levels the cost to SuperDOT customers of executing trades on the New York Stock Exchange in the stocks handled by SIG Specialists as specialist.

187. SIG Specialists gave execution preference to floor broker orders over SuperDOT orders. Some or all of the stocks assigned to Defendant SIG Specialists as the exchange market maker or "specialist," including, at a minimum, the stocks listed as such on Table 1 hereto (the

"SIG Specialists Managed Issues"), were the object of this anticompetitive, collusive and unlawful conduct. Corroboration of the particular impact upon and the reasonableness of these assessments of the economic of disadvantages to SuperDOT market orders in the SIG Specialists

44 Managed Issues can be calculated using execution performance statistics of Madoff, a competing market-maker in the identical SIG Specialists Managed Issues.

188. By giving preferential treatment to floor broker orders. over SuperDOT orders,

SIG Specialists violated, inter alia, Rules 70, 71, and 72 of the New York Stock Exchange concerning the order of trades, and thereby violated the Firm Quote Rule, SEC Rule I IAcl-1(c), and Section 11 A(c)(1) of the Exchange Act.

189. By conducting trades with SIG Specialists under this illicit two-tier market system, the broker defendants violated the Finn Quote Rule, SEC Rule 11 Ac 1-1(c), and Section

I 1 A(c)(1) of the Exchange Act.

190. The SIG Specialists Conspiracy Defendants and co-conspirators intended and expected, at the time they devised, implemented and maintained their anticompetitive conspiracies alleged herein, that their conspiracy would affect the execution quality, and thus cost, provided to SuperDOT orders.

191. As a result of the SIG Specialists Conspiracy Defendants' misconduct, Plaintiffs and the Class Members' trades placed through SuperDOT received inferior execution as compared to trades placed through the Broker Defendants, with the result that the cost of

Plaintiffs and the Class' Members trades was improperly inflated.

192. Throughout the Class Period, the SIG Specialists Conspiracy Defendants and their co-conspirators intended to and did affirmatively and fraudulently conceal their wrongful conduct and the existence and operation of the two-tiered market system from Plaintiffs and other members of the Class, as set forth in TT 133, 142 above.

EIGHTH CLAIM FOR RELIEF

Sherman Act 1 Claim Against the VDM Specialists Cons irac Defendants

45 193. Plaintiffs repeat and re-allege each and every allegation contained in the above paragraphs as if fully set forth herein.

194. Plaintiffs bring this claim against Defendants VDM Specialists, Fidelity and the

Broker Defendants (the "VDM Specialists Conspiracy Defendants"). Plaintiffs bring this claim under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, for the injuries sustained by

Plaintiffs and members of the Class arising from Defendants' violations of Section One of the

Sherman Act, 15 U.S.C. § 1.

195. Throughout the Class Period, the VDM Specialists Conspiracy Defendants and their co-conspirators engaged in a continuing combination and conspiracy in unreasonable restraint of trade and commerce in the pricing of trading execution services for the stocks assigned to VDM Specialists as specialist in violation of Section One of the Sherman Act, 15

U.S.C.§l.

196. This combination and conspiracy consisted of an agreement, understanding and concert of action among the VDM Specialists Conspiracy Defendants and their co-conspirators, the substantial terms of which were to discriminate against SuperDOT customers in the execution of their trades, and thereby to raise, stabilize and maintain at artificially high levels the cost to SuperDOT customers of executing trades on the New York Stock Exchange in the stocks handled by VDM Specialists as specialist.

197. VDM Specialists gave execution preference to floor broker orders over

SuperDOT orders. Some or all of the stocks assigned to Defendant VDM Specialists as the exchange market maker or "specialist," including, at a minimum, the stocks listed as such on

Table I hereto (the "VDM Specialists Managed Issues"), were the object of this anticompetitive, collusive and unlawful conduct. Corroboration of the particular impact upon and the

46 reasonableness of these assessments of the economic of disadvantages to SuperDOT market orders in the VDM Specialists Managed Issues can be calculated using execution performance statistics of Madoff, a competing market-maker in the identical VDM Specialists Managed

Issues.

198. By giving preferential treatment to floor broker orders over SuperDOT orders,

VDM Specialists violated, inter alga, Rules 70, 71, and 72 of the New York Stock Exchange concerning the order of trades, and thereby violated the Firm Quote Rule, SEC Rule 11 Ac 1-1(c), and Section 11A(c)(1) of the Exchange Act.

199. By conducting trades with VDM Specialists under this illicit two-tier market system, the broker defendants violated the Firm Quote Rule, SEC Rule 1 lAcl-l(c), and Section

11A(c)(1) of the Exchange Act.

200. The VDM Specialists Conspiracy Defendants and co-conspirators intended and expected, at the time they devised, implemented and maintained their anticompetitive conspiracies alleged herein, that their conspiracy would affect the execution quality, and thus cost, provided to SuperDOT orders.

201. As a result of the VDM Specialists Conspiracy Defendants' misconduct, Plaintiffs and the Class Members' trades placed through SuperDOT received inferior execution as compared to trades placed through the Broker Defendants, with the result that the cost of

Plaintiffs and the Class' Members trades was improperly inflated.

202. Throughout the Class Period, the VDM Specialists Conspiracy Defendants and their co-conspirators intended to and did affirmatively and fraudulently conceal their wrongful conduct and the existence and operation of the two-tiered market system from Plaintiffs and other members of the Class, as set forth in ¶' 133, 142 above.

47 NINTH CLAIM FOR RELIEF

Violation of Exchange Act Section 10(b) and Rule 10b-S

203. Plaintiffs repeat and re-allege each and every allegation contained in the above

Paragraphs as if fully set forth herein.

204. Plaintiffs bring this claim against Defendants NYSE, the Specialist Defendants, and the Integrated Routing Defendants (the "Securities Law Defendants"). Plaintiffs bring this claim against the Securities Law Defendants under Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78 et seq., and Rule lOb-5 promulgated thereunder, 17

C.P.R. § 240.10b- 5, and also under Rule 1Ob- 10 promulgated under the Exchange Act against the Integrated Routing Defendants.

205. Section 10(b) of the Securities Exchange Act of 1934 provides:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange-

(b) To use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors ." 15 U.S.C. § 78j.

206. Rule 10b-5, promulgated by the SEC pursuant to Section 10(b) provides:

It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

48 (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,

in connection with the purchase or sale of any security.

207. Rule lOb-b , promulgated by the SEC pursuant to Section 10(b) provides:

a. Disclosure requirement. It shall be unlawful. for any broker or dealer to effect for or with an account of a customer any transaction in, or to induce the purchase or sale by such customer of, any security (other than U.S. Savings Bonds or municipal securities) unless such broker or dealer, at or before completion of such transaction, gives or sends to such customer written notification disclosing:.. .

2. Whether the broker or dealer is acting as agent for such customer, as agent for some other person, as agent for both such customer and some other person, or as principal for its own account; and if the broker or dealer is acting as principal, whether it is a market maker in the security (other than by reason of acting as a block positioner); and

i. If the broker or dealer is acting as agent for such customer, for some other person, or for both such customer and some other person:.. .

B. The amount of any remuneration received or to be received by the broker from such customer in connection with the transaction unless remuneration paid by such customer is determined pursuant to written agreement with such customer, otherwise than on a transaction basis; and

C. For a transaction in any NMS stock as defined in Rule 242.600 of this chapter or a security authorized for quotation on an automated interdealer quotation system that has the characteristics set forth in section 17B of the Act, a statement whether payment for order flow is received by the broker or dealer for transactions in such securities and the fact that the source and nature of the compensation received in connection with the particular transaction will be furnished upon written request of the customer; provided, however, that brokers or dealers that do not receive payment for order flow in connection with any transaction have no disclosure obligations under this paragraph; and

D. The source and amount of any other remuneration received or to be received by the broker in connection with the transaction: 49 Provided, however, that if, in the case of a purchase, the broker was not participating in a distribution, or in the case of a sale, was not participating in a tender offer, the written notification may state whether any other remuneration has been or will be received and the fac t that the source and amount of such other remuneration will be furnished upon written request of such customer .. .

208. The Securities Law Defendants (i) employed devices, schemes and artifices to defraud; (ii) made false statements and omitted to state material facts necessary to make statements made not misleading; and (iii) engaged in acts, practices and a course of business which operated as a fraud and deceit upon the purchasers and sellers of shares on the New York

Stock Exchange, including Plaintiffs and Class members.

209. In an effort to enrich themselves through undisclosed and manipulative trading tactics, the Securities Law Defendants wrongfully appropriated assets and otherwise distorted and manipulated the costs of purchasing and selling the securities in violation of § 10(b) of the

Exchange Act and Rule 1 Ob-5.

210. All Securities Law Defendants are sued as primary participants in the wrongful and illegal conduct and scheme charged herein, as each committed the manipulative acts, deceptive practices, or omissions detailed herein. Specifically, despite their duty to conduct fair, orderly and open trading in public securities, the Securities Law Defendants maintained, and concealed, two markets, one for preferred customers - the members of the New York Stock

Exchange - and another for un-preferred customers such as SuperDOT traders.

211. Defendants' unlawful conduct caused Plaintiffs and Class members to purchase or sell shares on the New York Stock Exchange at distorted and manipulated cost, enriching

Defendants and damaging Plaintiffs and the Class. In furtherance of this unlawful scheme and course of business, Defendants took the actions set forth herein.

50 212. In support of their fraudulent scheme, the Securities Law Defendants repeatedly made misrepresentations which were intended to and did, cause investors to purchase and sell securities on the New York Stock Exchange. In repeated statements, press releases, advertisements and marketing brochures, the Securities Law Defendants promoted the integrity of the New York Stock Exchange market. The reoccurring theme of the misrepresentations was that the New York Stock Exchange provided the most efficient, competitive and equitable marketplace for trading stocks.

NYSE's False and Misleading Statements

213. Defendant NYSE and the New York Stock Exchange created a public image of honest and trustworthy stock trading that investors could rely on through numerous distinct misrepresentations.

214. On December 20, 2002, on the television show Nightly Business Report Richard

Grasso, NYSE Chairman and CEO, stated, in response to the backlash caused by the analyst scandal:

The American Public, some 85 million investors strong, don't expect the guarantee of a profit when they enter risk-taking in our capital system. What they expect, and what we should absolutely be in a position to deliver always, is a guarantee that their interests will be held first and primary to the interests of those in the intermediation business.

215. In an official informational brochure entitled "A Guide to the World's Leading

Securities Market" the NYSE states, among other things:

The NYSE provides an efficient, fair, and secure marketplace for investors to trade shares of stock. The NYSE's auction market enables investors to get the best price at the time of the transaction. The auction market represents price improvement at the point of sale, narrow spreads, and accountability to investors through extensive surveillance, ensuring a fair trading enviror rent.

51 216. In a press release dated January 8, 2001, and entitled "NYSE Media Statement re:

SEC Report on the Comparison of Order Executions Across Equity Market Structures" the

Exchange stated: "Our agency-auction model joins the greatest liquidity and transparency with the most efficient method of price discovery, leading to the lowest execution costs and best prices for customers."

217. On the NYSE's website in the "Question & Answer" section, the NYSE answered the question of "How does an NYSE listing benefit a non-U.S. company?" by stating:

In addition to providing access to the world's ' largest pool of investors, an NYSE listing provides public companies with the world's most efficient, competitive and equitable marketplace for the trading of their shares. The unmatched quality of the NYSE auction market - the broadest range of investors, the greatest liquidity, the most visibility, the most efficient and cost-effecting capital-raising process - are often cited as the most compelling reasons to list. Listing on the NYSE also enhances a company's reputation globally, not only among investors but all of its constituents. An Exchange listing also provides the currency for future strategic acquisitions in the U.S.

218. In Mr. Grasso's prepared testimony regarding the Hearing on Public Ownership of the U.S. Stock Markets in front of the Senate Banking Committee on Tuesday, September 28,

1999, he stated:

Over the years, the NYSE has served investors well by providing a highly liquid, efficient, and transparent market, with a system of self-regulation that is second to none.

219. A statement released by the NYSE entitled "Statement from NYSE Chairman and

CEO Dick Grasso" on April 25, 2002, provided: "[t]here is no room in financial markets, nor in financial intermediaries , for those who would put their own interests ahead of those of their customers."

52 220, In their November 1999 newsletter, the NYSE stated "Investors already get the best prices at the NYSE. The challenge is to make the process that delivers those prices increasingly efficient."

221. In their December 1999 newsletter, the NYSE stated: "Investors are entitled to the best possible price no matter where their orders originate or are executed. This is a challenge for the entire industry. Our collective goal must be to never forget who we serve: the investor."

Members' False and Misleading Statements

222. The Defendant Members also created a public image of honest and trustworthy stock trading that investors could rely on through numerous distinct misrepresentations.

223. Spear Leeds described its obligations as follows:

What is the role ofa Specialist?

Specialists are responsible for maintaining a liquid and continuous two-sided auction market by acting as both an agent and a principal. Specialists ensure that markets are fair, orderly and competitive.

224. Similarly, Spear Leads, through its Website, made the following representation:

OUR CLIENTS ALWAYS COME FIRST.

Since 1931, Spear, Leeds & Kellogg Specialists LLC has been committed to this simple, yet vital principle.

We proudly serve as specialist for 567 NYSE listed companies. Our portfolio is comprised of the most prestigious domestic and international companies, built one relationship at a time. SLKS clients benefit from our high standard of trading excellence, our significant capital position and our unique relationship with our parent, Goldman Sachs Group.

At SLKS, we are committed to building meaningful relations based upon mutual respect and trust, to providing our clients with comprehensive, relevant, useful information, and to making the most fair, orderly and liquid markets.

53 Integrity and honesty are at the heart of our business.

225. Bear Wagner misrepresented the market and its role as follows:

Specialists manage the auction market in the specific securities allocated to them. They must maintain a fair, competitive, orderly and efficient market at all times, even in those market conditions considered extreme. This means that all customer orders have an equal opportunity to interact and receive the best price on execution. Bear Wagner Specialists prides itself on our ability to maintain exceptional markets in the stocks we trade in all conditions even in the most difficult and volatile periods of market activity.

226. Fleet described its obligations as follows:

All customers, whether individual or institutional, must have an equal opportunity to interact and receive the best price. This premise is at the heart of an auction market and at the heart of the specialist's role. Our specialists focus on cushioning volatility. They act like shock absorbers to ensure trade-to-trade price continuity in either direction. A specialist sells on the upswing and buys on the downturn in order to create a fair, competitive, orderly and efficient market for the protection of shareholders.

The specialist is also the agent representing all SuperDOT (electronically routed) orders and for investors who place orders with brokers specifying price limits at which they are willing to trade.

227. LaBranche misleadingly represented that customers would be able to sell stock consistent with stated market conditions, as follows:

When assigned a particular stock, the specialist firm agrees to specific obligations. The specialist firm's role is to maintain, as far as practicable, trading in the stock that will be fair and orderly. This implies that the trading will have reasonable depth and price continuity, so that, under normal circumstances, a customer may buy or sell stock in a manner consistent with market conditions. A specialist firm helps market participants achieve price improvement in their trades because the best bids and offers are discovered through the auction process.

54 228. On June 18, 1999, LaBranche filed with the SEC a Registration Statement and

Prospectus on Form S-l, for the initial public offering of 11.5 million shares of LaBranche's common stock ("Registration Statement"). LaBranche filed amended versions of the

Registration Statement on July 26, 1999, July 30, 1999, August 16, 1999, and August 18, 1999.

George LaBranche signed this Registration Statement in his capacity as Chairman and CEO of

LaBranche.

229. Thereafter, on March 30, 2000, March 30, 2001, and March 15, 2002, LaBranche filed with the SEC its annual reports ("10-Ks") for the years ended December 31, 2000, 2001, and 2002, respectively. Each of these I0-Ks was signed by George LaBranche.

230. The Registration Statement and each of the 10-Ks, under the heading "NYSE

Rules Governing Our Specialist Activities," explained the trading rules to which specialists are required to adhere, including the obligation to execute customer orders before trading for the company's own account. in pertinent part, these filings stated:

[Aj specialist has a duty to maintain, as far as practicable, a fair and orderly market in its specialist stocks.

231. In its Annual Report for 2000, LaBranche stated:

As a NYSE Specialist, LaBranche plays an essential role in the auction market system. We act as agent, auctioneer, catalyst and principal. From its posts on the floor of the NYSE, the firm takes a proactive role in bringing together buyers and sellers, all the while fulfilling its obligation to maintain fair and orderly markets in the stocks it trades.

232. In its Annual Report for 2001, LaBranche stated:

Against a backdrop of an economy in recession and a substantial downward adjustment in the valuation of world equity markets, we remained solidly profitable while providing customers with the most transparent, fair and liquid markets anywhere.

As Specialists, we hold a unique position in the auction market

55 system, bringing together buyers and sellers and meeting our obligation to maintain fair and orderly markets in the stocks we trade.

233. In its Annual Report for 2002, LaBranche stated:

The march of technological change has enabled us to consistently improve the quality of execution - which means faster, lower-cost transactions with greater price transparency - and to bring the investor ever closer to the point of sale.

For us, technology is an essential tool in helping us fulfill one of our fundamental missions: to continually improve the quality of transaction execution.

LaBranche engaged in numerous initiatives designed... to lead the way in helping to create market environments that deliver superior execution to the investing community.

234. In its Annual Report for 2003, LaBranche stated:

LaBranche is committed to providing the most efficient stock executions utilizing cutting-edge technology. We are supportive of initiatives that enable the Specialist to execute with greater certainty when best price is still attained as a result. It is our goal to enhance the capability of our customers to access the vast pools of liquidity in our markets. In the long run, market quality and the cost of execution will determine the most successful market structure. We believe that our auction market, with the Specialist playing an important role, will continue to be the best market in the future. We believe that LaBranche is well positioned to benefit from the many changes taking place and, as always, will work to best maximize your investment.

The Specialists of LaBranche play a pivotal role in the function of the auction market that is at the heart of the NYSE. The auction market structure, which distinguishes the NYSE from other major equity markets, is considered among the world's most efficient market environments. At the NYSE, the auction market allows all participants, whether large or small, to interact in the marketplace in a fair way. The LaBranche Specialist is charged with maintaining fair, competitive and orderly trading. Combining human judgment, our firm's own capital, and advanced technology, our Specialists help create a trading environment that has become the most successful equity marketplace in the world.

56 235. In response to an article issued in the April 17, 2003 issue of The Wall Street

Journal, LaBranche issued a statement, which provided among other things, that:

LaBranche & Co fully recognizes and understands its role as the largest Specialist firm at the NYSE. In that regard, LaBranche & Co. has always held itself and its specialists to the highest standards . Our specialists have always focused on putting its customers first, as proven by the superior price improvement that our specialists provide to our customers on a daily basis. LaBranche & Co. has always been committed to the regulatory framework of the NYSE and has responded promptly to any area of regulatory concern.

236. Defendant George LaBranche was quoted in an April 18, 2003 Washington Post article, "Specialist Finns Scrutinized by NYSE," saying: "We work diligently to make sure our customers are getting the best prices available.... It is our priority to make sure their interests are protected."

237. Performance Group misrepresented the market and its role as follows:

Specialists must maintain a fair, competitive, orderly and efficient market. This means that all customer orders have an equal opportunity to interact and receive the best price. It also means that once auction trading begins, a customer should be able to buy or sell a reasonable amount of stock close to the last sale. Therefore, a specialist works to avoid large or unreasonable price variations between consecutive sales. The results: almost 98% of all trades take place at 1/8 point or less from the last sale.

238. Susquehanna International Group misrepresented the market and its role as follows:

The fundamental responsibility of a specialist on the New York Stock Exchange is to manage efficiently the trading of a company's shares, rapidly pairing off buyers and sellers while seeking the fairest possible execution for all parties involved.

239. Each of the statements described above were false because the market was not fair or "equal" for SuperDOT orders, as set forth above and each of the statements was misleading

57 for failure to disclose material facts concerning their illegal trading practices and market manipulation scheme. The Securities Law Defendants' misstatements and omissions were undertaken with a conscious disregard to the falsity of the statements made and with the intent to deceive, manipulate and defraud public investors trading New York Stock Exchange-listed securities. The Securities Law Defendants' scienter is demonstrated by their intentional defrauding of investors through the illegal schemes detailed herein and as further set forth below.

The intent required to commit these schemes demonstrates that Defendants acted with a conscious effort to deceive public investors.

False and Misleading Joint Statements

240. The various misrepresentations made by the Defendant Members set forth above and otherwise made during the Class Period are all statements reviewed and approved by the

NYSE and thus, in reality, are jointly misrepresentation of both the Defendant Members and the

NYSE.

241. In addition, individuals representing both the NYSE and New York Stock

Exchange members made statements during the Class Period that were designed to encourage public investors and issuers of securities to trade on the New York Stock Exchange. The NYSE and the New York Stock Exchange members knew that the members were beneficiaries of the representations and efforts made by one another to attract new issuers and public investors to the

New York Stock Exchange, and to retain the issuers and public investors already trading on the

New York Stock Exchange. Thus, these statements should be attributed to both the NYSE and its members.

242. For example, during the Class Period, Bob Murphy served as both a representative of LaBranche and as a member of the NYSE board. On November 12, 2002,

58 Murphy spoke on behalf of defendants LaBranche and the NYSE at an SEC public hearing in

New York City. During the meeting, the NYSE and LaBranche jointly represented to the investing public as follows:

Good morning, I am Bob Murphy, New York Stock Exchange specialist with LaBranche & Company as well as New York Stock Exchange Director and Vice Chairman of the board.... Specialists on the New York Stock Exchange are accountable to the investing public, for the quality of NYSE markets and their specialty stocks. This means that the specialist is responsible for fostering and maintaining liquidity and continuing two-sided auction markets on the NYSE floor. The specialist plays a pivotal role in insuring that investor orders receive the best possible execution. To accomplish this, specialists act both as agent and principal in their specialty stocks, to help insure that markets for those stocks are fair and orderly, and that they operate efficiently in the public interest.

The NYSE specialist is the focal point of the auction price discovery process. The specialist's primary job is to bring buyers and sellers together in an efficient and orderly manner to provide transparency and liquidity and to maximize the opportunity for public buy and sell orders to interact without getting between them.

243. Moreover, during such meetings, the NYSE and LaBranche jointly represented to the investing public that the wrongdoing in other markets supposedly did not exist on the New

York Stock Exchange:

The industry has changed quite a bit since I first came to Wall Street and not all for the better. I am concerned about a number of anti-customer practices that I see in the industry today. Dealers in other markets cherry pick the easiest orders of the least informed customers and execute those orders at prices discovered at the NYSE while NYSE specialists stand ready to accept all orders of all customers, including the offsetting orders of the cherry pickers.

Regaining investor confidence is crucial to the continued preeminence of our secondary markets, yet we have allowed to creep into our markets practices in which dealers and even agents put their own interests ahead of the interests of their customers.

The NYSE trading model precludes these anti-investor practices by

59 the very way that it has evolved. We integrate the trading of institutional and retail orders into a single auction and we apply automation to the extent consistent with that integration. This provides investors with optimal price discovery and maximum flexibility. Other markets take different approaches, but whatever model a market may choose, the Commission should not permit it to embody those anti-investor practices - and that requires the Commission to attack the root causes of those practices.

244. Defendants' joint representations to the public (including representations regarding how the specialists were executing transactions, the wrongdoing they were avoiding, the interaction benefits of such specialist execution, and the benefits of NYSE governance and enforcement) were all rendered false, by and were rendered incomplete and misleading by

Defendants' failure to disclose the material facts alleged herein.

Misleading Dash 5 Reports

245. The Securities Law Defendants also issued false and misleading Dash 5 reports.

As set forth in '¶ 129, 142 each of the Securities Law Defendants was responsible for issuing the

Dash 5 reports. However, as set forth in ¶j 130-31, those Dash 5 reports were false and misleading.

Violation ofRule IOb-10

246. In addition, the Integrated Routing Defendants violated Rules 10b-5 and lOb--10 by directing order flow through SuperDot with knowledge of the systemic bias against

SuperDOT orders in favor of floor broker orders.

ADDITIONAL SCIENTER ALLEGATIONS

247. The Securities Law Defendants acted with scienter when they committed the violations alleged herein as strongly inferred by their own statements, statements of others and empirical evidence, much of which is alleged above.

60 248. As set forth above, the Securities Law Defendants knowingly engaged in a scheme to systematically subordinate SuperDOT orders in favor of the orders of Securities Law

Defendants. Members of the Securities Law Defendants intentionally shared illegal information so that they could devise their own bids and bids of their fellow Securities Law Defendants to subvert the incoming SuperDOT orders. They further acted in concert to manipulate the execution of their own orders and the orders of their fellow Securities Law Defendants so that such orders were filled ahead of SuperDOT orders.

249. Defendants had actual knowledge of the illegal practices and omissions set forth herein, or acted with reckless disregard for the truth in that they failed to ascertain or to disclose the true facts, even though such facts were available to them. Defendants' omissions of material facts necessary to make the statements made not misleading were done knowingly or recklessly and for the purpose and effect of concealing the truth.

250. As a result of Defendants' misconduct, the costs of purchasing and selling the securities purchased or sold on the New York Stock Exchange by public investors were artificially manipulated and distorted during the Class Period. In ignorance of the true facts and the illegal practices of Defendants during the Class Period, Plaintiffs and other Class members purchased or sold shares on the New York Stock Exchange at artificially distorted and manipulated costs and were damaged thereby.

251. At the time of the illegal practices, Plaintiffs and other Class members were ignorant of them. Had Plaintiffs and other Class members known of the Defendants illegal practices, they would not have purchased or sold stock on the New York Stock Exchange through Super DOT at the artificially distorted and manipulated costs which they paid. Plaintiffs and Class members who traded on the New York Stock Exchange through Super DOT during the

61 Class Period relied on the integrity of the market in the securities of the public corporations listed and traded on the New York Stock Exchange.

252. By virtue of the foregoing, Defendants have violated § 10(b) of the Exchange Act, and Rule lOb-5. As a direct and proximate result of Defendants' wrongful conduct, Plaintiffs and the other Class members suffered damages in connection with their purchases or sales of the shares of stock on the New York Stock Exchange during the Class Period.

253. This action is filed within 2 years of the time that Plaintiffs could have discovered the alleged fraud through exercise of reasonable diligence.

TENTH CLAIM FOR RELIEF

Violations of Section 20(a) of the Exchange Act

254. Plaintiffs repeat and re-allege each and ever allegation contained in the above paragraphs as if fully set forth herein.

255. This Claim is brought pursuant to §20(a) of the Exchange Act against all

Defendants as control persons. The Securities Law Defendants are controlled by their corporate parents. The Securities Law Defendants control the individual specialists.

256. Each of Goldman Sachs, Bear Steams, BOAC, LaBranche, Inc., SIG, VDM

Holding, Merrill Lynch & Co., Citigroup Global, Citigroup, CS Group, Jeffries Group and

Fidelity are Control Person Defendants with respect to their respective controlled person

Defendants (the "Controlled Defendants") set forth above.

257. Each of the Control Person Defendants acted as a controlling person of the identified Controlled Defendants within the meaning of §20(a) of the Exchange Act for the reasons alleged herein. By virtue of their ownership, operation management or regulatory control, each of the Defendants had the power to influence and control and did influence and

62 control, directly or indirectly, the conduct of their controlled persons. The Defendants, as controlling persons, had the power and ability to prevent these unlawful market manipulation activities, the fraudulent scheme and the course of business that operated as a fraud or deceit on investors trading stock on the New York Stock Exchange.

258. By virtue of their positions as controlling persons, each of the Control Person

Defendants is liable pursuant to §20(a) of the Exchange Act for the liability of each of the

Controlled Persons under Section 10(b) as set forth above.

259. As a direct and proximate result of Defendants' wrongful conduct, Plaintiffs and other Class members suffered damages in connection with their purchases and sales of shares of stock on the New York Stock Exchange during the Class Period.

ELEVENTH CLAIM FOR RELIEF

Violation of Section 10(b) and. Rule 10b-5 Against the Broker Defendants

260. Plaintiffs repeat and re-allege all paragraphs above as if fully set forth herein.

261. This claim is brought against the Broker Defendants. Section 10(b) and Rule lOb-

S impose liability on, inter aria, those who trade in securities on the basis of material, nonpublic information. Rule lOb-S is violated when a person trades securities in possession of material, nonpublic information obtained or used in breach of a duty arising out of a relationship of trust and confidence, regardless of whether he owed any duty to the shareholders of the traded stock.

262. The material, non-public information in this case is the existence of the secret, two-tiered market within the NYSE, as described above. Within this secret regime, the Floor

Submarket enjoyed an execution quality vastly superior to that of the SuperDOT Submarket.

263. As set forth above, the Broker Defendants learned of the two-tiered market as a result of their access to the information obtained - and shared with the Floor Brokers - by the

63 Specialists and at the Specialists' computers, including all information about orders placed over the SuperDOT system by customers, and information about the execution and relative execution quality of the SuperDOT orders and Floor Broker orders, which was also obtained through the

Floor Brokers' special access to the information intended only for the Specialists.

264. In an effort to preserve their waning floor business, the Broker Defendants (i.e., those who maintain operations as floor brokerages) had motive and opportunity to curtail the efficacy of SuperDOT trades. Not only did the Broker Defendants subvert SuperDOT orders to lower the costs of their own personal trading but also to justify the commissions they charged to their own customers.

265. The Fully and Internally Integrated Defendants had a duty to either disclose to the public the existence of the secret, two-tiered market or refrain from trading in such a market.

TWELFTH CLAIM FOR RELIEF

Breach of Fiduciary Duty Against the Specialist Defendants

266. Plaintiffs repeat and re- allege all paragraphs above as if fully set forth herein, except to the extent that the allegations could be construed to allege any misrepresentation

(misstatement or omission) of information.

267. Plaintiffs assert this claim against the Specialist Defendants for breach of the fiduciary duty which they owed to Plaintiffs and the Class.

268. The Specialist Firms manage the auction market in the specific securities assigned to them on the New York Stock Exchange, and, in that capacity, each of the Specialist

Defendants had an exclusive right to manage the market for specific securities, and collectively the Specialist Defendants had the right to manage the markets for every security listed on the

New York Stock Exchange and every trade entered through the SuperDOT system.

64 269. The Specialist Defendants act as agents with respect to all orders entered over the

SuperDOT system and therefore owed a fiduciary duty to the Class with respect to those orders.

Unlike orders entered through Floor Brokers, the SuperDOT orders entered on behalf of the

Class go directly to the Specialists and are handled only by the Specialists, and, therefore, the

Specialists have discretion in the handling of all such orders, subject only to the rules of the

S.E.C., the New York Stock Exchange and any other regulatory agency.

270. Pursuant to the rules of the SEC and the New York Stock Exchange, Plaintiffs and the Class, as investors through the SuperDOT system, were and are entitled to an equal opportunity to interact and receive the best price and execution on the New York Stock

Exchange.

271. Because the Specialist Defendants operated as agents and were in a position of trust and confidence toward their "customers," i.e., public traders on the New York Stock

Exchange, and executed trades for SuperDOT customers when they cannot watch, and because the Specialist Defendants were and are required by law and rule to place the interests of their customers ahead of their own, the Specialist Defendants owed Plaintiffs and the Class a fiduciary duty in the execution of their orders on the New York Stock Exchange.

272. The Specialist Defendants violated their fiduciary duties by failing to maintain a fair and orderly market by manipulating the timing of executions in favor of Floor Broker customer and to the detriment of SuperDOT customers.

273. As a direct and proximate result of the Specialist Defendants' conduct, Plaintiff and Class members have suffered damage.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs pray for relief and judgment as follows:

65 (a} Determining that this action is a proper class action, and certifying Plaintiffs as class representatives under Rule 23 of the Federal Rules of Civil Procedure.

(b) Awarding compensatory damages, including interest, in favor of Plaintiffs and the other Class members against all Defendants, jointly and severally, for all damages sustained as a result of Defendants' wrongdoing, in an amount to be proven at trial, including interest thereon, and insofar as those damages relate to violations of the antitrust laws, that the amount be trebled in accordance with the antitrust law;

(c) Awarding treble damages pursuant to the Sherman Act;

(d) Awarding equitable and/or injunctive relief in favor of Plaintiffs against

Defendants and their counsel, agents and all persons acting under, in concert with, or for them, including an accounting of, and the imposition of, a constructive trust or an asset freeze on

Defendants' unlawful trading proceeds;

(e) Awarding Plaintiffs and the Class their reasonable costs and expenses incurred in this action, including counsel fees and expert fees; and

(f) Such other and further relief as the Court may deem just and proper.

JURY DEMAND

Pursuant to Federal Rule of Civil Procedure 38(b) and otherwise, Plaintiffs respectfully demand a trial by jury.

66 DATED: June 1, 2007 BECKER MEISEL LLC MARTIN L. BOROSKO JAMES M. MCCARRICK JOHN J. O'CONNELL JOSEPH G. HAXfR4KA, JR.

G. HARRAKA, J19474)

Eisenhower Plaza 11 V 354 Eisenhower Parkway Suite 2800 Livingston, New Jersey 07039 (973) 422-1100 Phone (973) 422-9122 Fax

SCHATZ NOBEL IZARD P.C. ANDREW M. SCHATZ JEFFREY S. NOBEL SETH R. KLEIN 20 Church Street Suite 1700 Hartford, CT 06103 (860) 493-6292 Phone (860) 493-6291 Fax CERTIFICATION OF NAMED PLAINTIFF

1, Per Barre, hereby certify that the following is true and correct to the best of my

knowledge, information and belief,

I . I am the sole Managing Member of the sole general partner of Sea Carriers, LPI and

President and Chief Executive Officer of Sea Carriers Corporation, the Plaintiffs in this action, ands have reviewed and authorized the filing of the complaint in this action (the "Complaint"). The

Plaintiffs wouldbe willing to serve as lead plaintiffs on behalfofthe class (the "Class") as defined in the Complaint, and the Plaintiffs and I would be willing toprovide testimony at deposition and trial, if necessary.

2. Plaintiffs did not'purchase the securities that are the subject of this action at the direction of Plaintiffs' counsel or in order to participate in this private action.

3. Plaintiff Sea Carriers, LPI had transactions in approximately 2 billion shares of stock on the New York Stock Exchange through the SuperDOT system during the Class Period defined in the Complaint. Plaintiff Sea Carrier Corporation, through a joint venture or other contractual relationship with Empire Programs, Inc. or its principal, traded approximately 4.5 billion shares of stock on the New York Stock Exchange through the SuperDOT system during the Class period.

4. During the three years prior to the date of this Certification, neither Plaintiffs nor I have sought to serve, nor have any of us served, as a representative party on behalf of a class in any private action arising under the federal securities laws except that Plaintiffs sought to serve as lead plaintiff in In re Specialists Securities Litigation, No. 03 Civ. 8264 (RWS) in the Southern District of

New York.

5. Neither Plantiffs nor I will accept any payment for serving as a representative party on behalf of the Class beyond our pro rata share of any possible recovery, except such reasonable costs and expenses (including lost wages) directly relating to the representation of the Class as ordered or approved by the Court.

i declare under penalty of perjury that the foregoing is true and correct.

Executed this day of , 2007 Table 1 Specialist Managed Issues (June 2003)

Specialist Firm Stock Symbol WAGNER STOTT BEAR SPEC. BK WAGNER STOTT BEAR SPEC. C WAGNER STOTT BEAR SPEC. HON WAGNER STOTT BEAR SPEC. MER WAGNER STOTT BEAR SPEC. ONE WAGNER STOTT BEAR SPEC. PG WAGNER STOTT BEAR SPEC. TGT WAGNER STOTT BEAR SPEC. TXN LA BRANCHE CO. AXP LA BRANCHE CO. CCU LA BRANCHE CO. COF LA BRANCHE CO. CVX LA BRANCHE CO. FRE LA BRANCHE CO. LEH LA BRANCFIE CO. LOW LA BRANCHE CO. MMM LA BRANCHE CO. MRK LA BRANCHE CO. MWD LA BRANCHE CO. SBC LA BRANCHE CO. WB LA BRANCHE CO. WFC LA BRANCHE CO. XOM FLEET MEEHAN SPECIALIST CAH FLEET MEEHAN SPECIALIST CAT FLEET MEEHAN SPECIALIST GE FLEET MEEHAN SPECIALIST GM FLEET MEEHAN SPECIALIST GS FLEET MEEHAN SPECIALIST HD FLEET MEEHAN SPECIALIST JNJ FLEET MEEHAN SPECIALIST 3PM FLEET MEEHAN SPECIALIST KO FLEET MEEHAN SPECIALIST OMC FLEET MEEHAN SPECIALIST UNH FLEET MEEHAN SPECIALIST WMT SUSQUEHANNA SPECIALISTS ADI SPEAR LEEDS AND KELLOGG AIG SPEAR LEEDS AND KELLOGG BA SPEAR LEEDS AND KELLOGG BAC SPEAR LEEDS AND KELLOGG BBY SPEAR LEEDS AND KELLOGG FNM SPEAR LEEDS AND KELLOGG FRX SPEAR LEEDS AND KELLOGG IBM SPEAR LEEDS AND KELLOGG KRB SPEAR LEEDS AND KELLOGG NOC SPEAR LEEDS AND KELLOGG UTX SPEAR LEEDS AND KELLOGG VZ SPEAR LEEDS AND KELLOGG WM VAN DER MOOLEN SPECIALISTS USA IP VAN DER MOOLEN SPECIALISTS USA KSS VAN DER MOOLEN SPECIALISTS USA LLY VAN DER MOOLEN SPECIALISTS USA PFE