“Seven former traders and executives of Datek Online, a pioneer in online stock trading, agreed yesterday to pay $70 million in fines for what regulators called illegal trading and fraudulent bookkeeping during the market boom of the 1990’s,” writes David Barboza in today’s New York Times.

“The Securities and Exchange Commission called it one of the largest securities fraud settlements ever.”

“Regulators said the group of former traders and executives made tens of millions of dollars from stock fraud that went on for nearly a decade and involved taking advantage of a Nasdaq trading system that was intended to help smaller investors.”

“Jeffrey A. Citron, 32, Datek’s former chief executive, and Sheldon Maschler, 58, the former chief trader, agreed to the largest fines, $22.5 million and $29.2 million, respectively. They also agreed to be permanently barred from the securities industry. The others paid smaller fines and penalties.”

“Under the terms of the settlement, Mr. Citron and Mr. Maschler acknowledged no wrongdoing.”

“Regulators said the former Datek executives were caught taking advantage of a system that was set up to help smaller investors have their trades executed quickly.”

” ‘They always portrayed themselves as the little guy on Wall Street,’ said Marc Beauchamp, executive director of the North American Securities Administrators Association, which represents state securities regulators. ‘But apparently they were gaming the system for the benefit of a handful of Datek executives.’ “

“Mr. Citron and Mr. Maschler were instrumental in transforming Datek from a small day-trading operation in Brooklyn into one of the nation’s fastest-growing online brokers in the late 1990’s. They also helped create Island E.C.N., Datek’s online stock trading network that once petitioned regulators to become a full-fledged stock exchange.”

“Datek, which long ago distanced itself from its former day-trading operation and was recently acquired by Ameritrade, paid a $6.3 million fine a year ago to regulators to settle similar accusations of stock fraud.”