Four former stockbrokers at Citigroup, Lehman Bros and Merrill Lynch have been charged with securities fraud for letting day traders eavesdrop on internal conversations with institutional clients.

Four former Wall Street brokers have been indicted for a scheme allowing day traders to eavesdrop on internal communications and profit by trading ahead of large share orders and subsequent price movements, U.S. prosecutors said on Monday. The brokers were accused of securities fraud, conspiracy, and receiving commercial bribes, according to an indictment unsealed in U.S. District Court in Brooklyn on Monday. The Securities and Exchange Commission also charged the four former brokers as well as a day trader who paid for the information. The four brokers -- Ralph Casbarro, who worked at Citigroup Global Markets; David Ghysels, formerly at Lehman Brothers; Kenneth Mahaffy, previously at Merrill Lynch and Citigroup; and Timothy O'Connell, formerly at Merrill Lynch -- provided day traders at A.B. Watley Inc. and Millennium Brokerage LLC with material, non-public information, according to the indictment. Day trader John Amore, of A.B. Watley, was accused by the SEC of paying the brokers to gain live audio access to the Wall Street firms' so-called internal "squawk boxes" that broadcast institutional orders to buy or sell large blocks of securities.

Four former stockbrokers at Citigroup, Lehman Bros and Merrill Lynch have been charged with securities fraud for letting day traders eavesdrop on internal conversations with institutional clients.

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