The Securities and Exchange Commission today approved a US $241million US settlement with five New York Stock Exchange specialist firms accused of putting their own interests ahead of those of their customers.

The SEC and the NYSE issued a joint statement on the settlement.

The five firms — Bear Stearns subsidiary Bear Wagner Specialists, FleetBoston subsidiary Fleet Specialist Inc., LaBranche & Co., Van der Moolen Specialists and Goldman Sachs subsidiary Spear, Leeds & Kellogg — violated securities laws by executing their own orders for the shares they managed ahead of customers’ orders, thus depriving clients of fair trades and possibly better prices, the statement said.

Under the settlement, US$87.7 million will go to customers damaged by the firms’ actions. The rest of the money represents fines that will go to the SEC and NYSE, according to the commission.

The firms, without admitting or denying the charges, will take steps to improve their regulatory compliance procedures and supervision, the SEC said.

A spokesman for the NYSE said the exchange had no further comment beyond the joint statement issued with the SEC.

Specialists on the NYSE floor bring buyers and sellers together in auction-style trading, attempting to match them at a mutually acceptable price. Specialists also buy and sell the shares that they manage, and use their stock to help meet supply or demand where lacking.

However, the specialist firms named in the settlement stepped in front of other trades to make profits on their own shares, putting their customers at a disadvantage, the statement from SEC and NYSE said.

Since the NYSE announced its investigation in April, the exchange has implemented computer systems that flag questionable trades, notifying the NYSE’s internal regulators.