No Kidder customers were hurt by the phony trades, said to have been booked by Joseph Jett, who was fired last month, Kidder emphasizes.

A former member of the American Stock Exchange, Mr. Avasso had been banned from the exchange for reporting phony trades.

So to get the profits back, he would have to put on more phony trades.

Phony Trades Mr. Bilzerian was also charged with engaging in a conspiracy to commit tax fraud by making phony trades intended to produce illegal tax losses.

The report said Mr. Jett used phony trades - transactions that were never made but could be recorded on the faulty accounting system - to produce phony profits.

Altered Trading Methods All along, Wall Street traders have wondered out loud if Mr. Jett's phony trades were, as one of them put it, an "honest mistake."

By the end of March, Mr. Jett had reported $1.7 trillion in phony trades.

The Government says he made phony trades intended to produce illegal tax losses.

But he said that accusations of kickbacks and phony trades were unsubstantiated.

Mr. Jett was dismissed as head of the firm's government-bond trading desk in April and accused by the company of fabricating $350 million in profits with phony trades.