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Two class action lawsuits filed by hedge funds in Manhattan federal court indicate major problems in U.S. stock markets. The hedge funds blame big brokerage firms for failing to deliver shares of stock "sold short" by the hedge funds. The problem: buyers who paid for shares didn't get the stock, but don't know it. The hedge funds - Electronic Trading Group LLC and Quark Fund LLC - say they were swindled by their "prime brokers," including Merrill Lynch, Banc of America Securities, Goldman Sachs, Lehman Brothers, Citigroup, Bear Stearns and Morgan Stanley. ETG and Quark allege their prime brokers conspired to charge very high fees for securities lending services and to fail-to- deliver (FTD) shares required by law for "short sale" purposes.
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