Prosecutors revealed that 54 arrests had been made. Others charged included two so-called "ringers" - the individuals who took the exams in place of the brokers - and middlemen who kept the scheme running. Some brokers also subsequently became middlemen.
Robert Morgenthau, the US District Attorney for Manhattan, said he also expected further arrests from the case, which was the fruit of a two-and- a-half year undercover investigation. The Securities and Exchange Commission (SEC) recently also revealed it had evidence of examinations fraud.
At the heart of the scam was a national, six-hour exam that all aspiring brokers must take before they can be licensed. It is designed to ensure a minimum knowledge of the federal rules and regulations governing securities trading and the financial markets. Roughly 200,000 tests are taken across the US each year at 56 sites.
The applicant traders allegedly would pay the ringers between $2,000 and $5,000 to sit the exams for them or promise them a commission on their future legitimate business. The fraud began to unravel, however, when supervisors at some of the test centres began noticing the same individuals - the ringers - turning up more than once to take the tests under different names.
Most of the brokers are employed by small, relatively obscure securities firms dotted around the US. One of the accused middlemen was said to be an employee of Gruntal & Co, a widely-known New York trading house.
Officials said they had no evidence of any financial damage inflicted by the traders on customers. There was clear concern, however, for the reputation of the securities industry as a whole.
"By claiming to have qualified on examinations these people have eroded people's confidence in the working of the market," said Mary Shapiro of the National Association of Securities Dealers. "It is a serious violation of the law."
Steps have already been taken to tighten security at the test sites to make fraud harder to perpetrate. Applicants are now finger-printed to match their identities with their names and the examinations themselves are videotaped.