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Justice Department quickens pace of Nasdaq probe


NEW YORK -- The Justice Department is speeding up its antitrust probe of the Nasdaq stock market by imposing an early-summer deadline for investigators to come up with preliminary results of their findings.

Assistant Attorney General Anne Bingaman has asked the government's team of a half-dozen attorneys and economists looking into possible collusion among Nasdaq dealers to report their findings by the end of June, a person at the Justice Department said.

The securities industry was skeptical the government has found any smoking gun to prove that Nasdaq market makers colluded to keep the difference, or spreads, between stock bid and ask prices unusually large.

"They are asking for very general information on why the spreads are large and how trades are made," said Steven Newborn, an attorney at Rogers & Wells who represents two securities firms. "They are looking for evidence of collusion, but I doubt they will ever find it."

Since launching the probe in October, Justice Department investigators have received -- and are still receiving -- truckloads of documents from the roughly three dozen securities firms it contacted.

Recently, Wall Street traders and executives at institutional firms including Goldman, Sachs & Co. and Lehman Brothers Inc. and market makers Troster, Singer Corp. and Herzog, Heine, Geduld have been asked to appear before government investigators.

"We are actively pursuing all leads in the case," said a Justice Department spokesman.

He declined to elaborate further.

The June deadline was first reported in yesterday's Wall Street Journal.

Traders interviewed by the Justice Department said the investigators appeared to be focusing less on finding evidence of collusion and more on finding flaws in the structure of the Nasdaq market.

"It was almost more like a fact-finding informational thing," said one trader at a large institutional firm. "The overall view I got was it was almost like the NASD was on trial."

The National Association of Securities Dealers is the self-regulatory organization overseeing the Nasdaq market.

By asking investigators to present their preliminary findings in June, Ms. Bingaman "is just trying to speed [the probe] up a

little," said Mr. Newborn, who expected the investigation to last another year.

"I doubt any date she gives will ever be met" given the amount of information they need to process, he said.

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