The

New York Stock Exchange

has booted three former

LaBranche

(LAB)

employees for failing to cooperate with an investigation into abusive trading by Big Board specialist firms.

The three former specialists, Eugene McCarthy, Vincent Papandrea and Anthony Picerni, each failed to appear before NYSE regulators to answer questions about their activities. Rather than testify, each man chose to settle with the NYSE and agree to a permanent ban from working again as a specialist.

LaBranche is one of five major specialist firms that drive trading on the Big Board. Two years ago, LaBranche and the others paid $242 million in fines and restitution to the

Securities and Exchange Commission

to settle allegations they violated their obligation to give investors the best possible price on a stock.

Regulators found that the specialists, in some instances, improperly made proprietary stock trades ahead of their customers' orders. In other words, the specialist firms took advantage of their customers by first making their own trades and then completing a customer's at an inferior price.

Specialist firms, which earn commissions for matching buyers and sellers on an exchange, also make money from trades made to smooth out fluctuations in stock prices. The firms are permitted to make proprietary trades for their accounts, but not at the expense of any customer.

The NYSE said it is continuing to "pursue those specialists and clerks who abused the public's trust.''