Updated from 9:40 a.m. EST

The five biggest

New York Stock Exchange

specialist firms tentatively agreed to pay a total of $240 million to settle an

SEC

probe into insider practices that allegedly allowed them to profit at the expense of ordinary investors.

The companies are

LaBranche

(LAB)

;

FleetBoston

(FBF)

;

Bear Stearns'

(BSC)

Bear Wagner venture;

Goldman Sachs'

(GS) - Get Report

Spear Leeds; and

Van Der Moolen

(VDM)

.

News of the settlement comes about a month after LaBranche and Van Der Moolen

said they had received so-called Wells notices from the SEC, which indicated a civil enforcement action was imminent. The SEC had more broadly stated in October that it intended to punish the firms for practices including front-running, in which specialists trade for their own account with knowledge of market-moving orders.

The deal must still be approved by the SEC's top commissioners, but details began to leak out early Wednesday morning.

In a press release Wednesday morning, LaBranche confirmed the tentative deal with the SEC. The firm said it would pay a total of $63.5 million in restitution to customers and civil penalties for "certain trades that occurred during the five-year period from 1999 to 2003." In a regulatory filing, Van Der Moolen said it would pay between $51.8 million and $57.7 million. Van Der Moolen noted that the SEC attorneys conducting the investigation favor the firm paying the higher amount.

The alleged schemes are the basis of a suit brought in December by the $138 billion California Public Employees Retirement System. The suit -- which could be bolstered by the settlement -- seeks to return millions, or even billions, of dollars to investors, reflecting the dollar amount of the illicit gains, the system alleges.

Unlike on the

Nasdaq

, where trading is carried out electronically, the NYSE relies on an auction system for buying and selling stocks in which specialists are supposed to facilitate an orderly market. The system came under fire following the ouster of former Big Board Chairman Richard Grasso in a pay scandal.