Stock-Lending, Family Style

Three generations of Landos, most of whom hail from New York's Staten Island, have worked on the stock-loan desks of Wall Street brokerages. Other Lando members have been self-employed stock-loan finders -- intermediaries who help broker loans to hedge funds and other traders.

A gaggle of Landos work in stock-lending now, including three brothers and a sister: Andrew Jr., Joseph, Michael and Andrea, people familiar with the family say. Andrew Jr. is the former head of stock-lending with Bank of America(BAC Quote). The patriarch of the Lando family is Andrew Sr. He is retired, but once ran the stock-loan desk at Weiss Peck & Greer, now part of Robeco Investment Management.

Some of the transactions under scrutiny involve stock loans made at Bear Stearns(BSC Quote), Goldman Sachs(GS Quote), Janney Montgomery Scott and Nomura Securities, among other brokerages. One thing investigators are looking at is dealings between Landos working at different brokerages, and Landos serving as stock-loan finders.

The family's defenders point out that it's not a crime for members of the same family to be active in the same line of business. Nor is there anything improper with siblings working at different firms and doing business with one another.

"It appears that because the Lando family has been in the business for so long, there is an undue emphasis on their relationship. But they've always acted appropriately," says Michael Bachner, who represents Joseph Lando, formerly of Janney Montgomery. "We're confident that they will find nothing."

People familiar with the probe say the investigators believe that in most instances, stock finders are ripping off the hedge fund borrowers, along with the brokers that lend out the shares to traders looking to open a short position in a stock.

Still, there's no indication that regulators or federal prosecutors are close to charging any of the individuals under scrutiny. It also does not appear that the firms where the individuals work are in any trouble.

Federal prosecutors and securities regulators declined to comment on the investigation. The various Wall Street firms where the Lando family members either currently work, or used to work, also have had no comment.

Several Lando family members contacted by TheStreet.com, including Andrew Jr. and Joseph, said they had nothing to say on the matter. Andrew Jr.'s attorney, Seth Levine of Foley & Lardner, had no comment. Andrea Lando, who used to work as a stock-loan finder, according to sources, could not be reached for comment. Her attorney, Kenneth Kaplan, declined to comment.

But Bachner, the attorney for Joseph Lando, says the Landos' relationships were well-known to their respective employers and no secret on Wall Street.

"The Landos have always played diligently by the rules that have been in existence," says Bachner. "Now it appears that the New York Stock Exchange is creating new rules."