Nasdaq Trading May Draw Charges

The Nasdaq Stock Market’s parent organization faces possible civil charges alleging Nasdaq regulators failed to stop illegal trading practices, a published report said Friday.

Such a case, if brought, would be a rare rebuke by the Securities and Exchange Commission of conduct on Nasdaq, the nation’s second-largest stock market and home to leading high technology companies like Microsoft Corp. and Apple Computer Inc.

The SEC has formally censured exchanges only three times for inadequate policing of their markets, an agency official said.

SEC investigators believe the National Association of Securities Dealers, which runs Nasdaq, failed to stop illegal practices, which raised small investors’ costs for buying and selling Nasdaq stocks, The Los Angeles Times reported.

Citing unnamed sources familiar with the SEC investigation, the newspaper said the allegations include manipulation of stock prices, refusal to honor quoted prices, illegal delays in reporting big trades and harassment of colleagues who broke ranks to narrow their spreads, or profit margins.