CalPERS to pursue lawsuit despite settlement

The largest U.S. public pension fund said on Wednesday it has no current plans to withdraw its lawsuit against the New York Stock Exchange for trading improprieties, in spite of a recently announced $240 million settlement between regulators and floor traders.

In December, CalPERS filed suit against the NYSE and its specialist trading firms, alleging widespread trading abuses.

On Tuesday, a source with knowledge of the settlement said that five of the largest floor trading firms that buy and sell specific stocks on the NYSE trading floor had agreed in principle to settle charges that they short-changed investors.

Two of those firms -- LaBranche Inc. and Dutch-based Van der Moolen disclosed that each would pay at least $50 million to resolve the accusations. The companies neither admitted nor denied wrongdoing.

The $240 million sum includes fines, as well as disgorgement for investors who were put at a disadvantage by improper trading activity.

But Brad Pacheco, a CalPERS spokesman, said the pension fund plans to move forward with its lawsuit against the NYSE and its specialist trading firms, at least for the time being.

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"We believe (the settlement) will strengthen our lawsuit," he said. "We look forward to looking at the details of this settlement because we don't have all the facts yet."

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But he added that the tentative agreement "proves the very point of our lawsuit: that self-regulation doesn't work."

The specialists that have yet to announce their part of the settlement are FleetBoston Financial Corp.'s Fleet Specialist unit, Bear Stearns Cos.' Bear Wagner Specialists, and Goldman Sachs Group Inc.'s Spear, Leeds & Kellogg.