The U.S. Securities and Exchange Commission has charged a former floor broker clerk with alerting day traders to large incoming institutional orders.

The SEC said Wednesday it has charged Frank Furino with disclosing large, pending block orders from institutional customers to a day trader in return for cash payments between August 2000 and December 2001. The commission alleges that the day trader traded ahead of the customer orders and profited on short-term price movements when the block order was filled. These allgations have yet to be proven.

Furino, 48, was employed on the floor of the New York Stock Exchange as a clerk for a floor broker, Jefferies Execution Services Inc. and its predecessor, Lawrence Helfant LLC.

The commission alleges that the day trader made more than US$300,000 in trading profits on at least 58 trades. It says that Helfant’s customers suffered losses because the scheme allowed the day trader to trade at more favorable prices than the customers were able to receive. Furino solicited and received from the day trader payments ranging from $2,500 to $10,000 per month over the course of the scheme.

The SEC says that Furino’s conduct breached duties of confidentiality and trust that he owed to his employer and to his employer’s customers. He also violated his firm’s written policies requiring confidential treatment of customer information, forbidding the use of confidential client information for personal benefit or for the benefit of another client, and forbidding acceptance of undisclosed compensation from clients.

The complaint, which was filed in the U.S. District Court for the Eastern District of New York in Brooklyn, charges Furino with securities fraud and seeks disgorgement of illegal profits, penalties, and an injunction against future violations.