Updated from 8:39 a.m. EDT

Fifteen current and former specialists on the

New York Stock Exchange

were indicted on criminal charges that they abused their position as stock-trading middlemen to fleece unsuspecting clients.

The charges stem from a two-year investigation of the major specialist firms that drive trading in Big Board stocks and resulted in seven specialist firms paying $247 million in fines last year to the

Securities and Exchange Commission

The indicted specialists included employees of




Van der Moolen



Bank of America's

(BAC) - Get Report

specialists division;

Goldman Sachs'

(GS) - Get Report

Spear, Leeds & Kellogg; and

Bear Stearns'


Bear Wagner.

In a related action, the SEC filed civil fraud charges against the 15 specialists charged by prosecutors, along with five others. The SEC also ordered the NYSE to set aside $20 million to beef up surveillance of its specialists, as part of a settlement of allegations that it failed to supervise the traders.

The charges stem from a four-year period, beginning in 1999. Prosecutors and regulators contend the firms violated their obligation to give investors the best possible price on a stock. In allegedly violating this obligation, the specialists made their own trades and profited at their customers' expense, say prosecutors.

"These individuals violated the public trust by abusing the privileged position they had as specialists on the New York Stock Exchange," said SEC Director of Enforcement Stephen Cutler. "We have zero tolerance for specialists who trade for their firm's proprietary account when they should be trading for the accounts of their customers."