WASHINGTON - At least 10 current or former brokers at major Wall Street and other firms have been targeted for possible indictment by the Justice Department in connection with a grand jury investigation in New York City of anticompetitive practices in investments and derivatives in the municipal market, according to regulatory filings.

All 10, or their current or former firms, disclosed in regulatory filings that they had received written notifications from the Justice Department stating either that they are "target[s]" of the grand jury investigation or that they have been contacted in connection with possible violations of antitrust and other laws.

In addition, NELNET Inc., an education planning and financing company, disclosed Friday that Shockley Financial Corp., an indirect wholly owned subsidiary, and two associates who provided investment advisory services for municipal and corporate bonds, on Feb. 8 were subpoened by a grand jury in New York City for documents and information relating to the criminal investigation.

In the annual 10-K financial statement it filed with the Securities and Exchange Commission, NELNET also said that it, SFC, or other subsidiaries may receive subpoenas from the SEC or other regulators in this matter. "The company understands that the antitrust division of the U.S. Department of Justice, the [SEC] and the Internal Revenue Service have each been conducting investigations of [guaranteed investment contract] placement activities."

Market participants said Friday that the individuals and firms known to have been subpoenaed or to have received target letters in the investigation may just the tip of the iceberg. Most firms are not publicly disclosing the Justice Department actions until their 10-K financial filings are due. Securities firms appear to be including disclosures of the target letters in the regulatory filings for their employees, even before their 10-K filings are due, but banks and investment advisory firms are not subject to the same disclosure requirements. A number of banks, like Bank of America Corp., put their derivatives activities into separate subsidiaries where their employees are not registered broker-dealers. The banks typically are subject to SEC financial filing requirements, however.

"The fundamental issue that people are going to have to deal with is that these were not considered to be securities and some firms put them in subsidiaries that were not subject to any sort of regulation," Christopher Taylor, the Municipal Securities Rulemaking Board's former executive director, said Friday.

The Justice Department target letters show that the department's antitrust investigation of bid-rigging and other anticompetitive practices in municipal bond-related investments and derivatives is moving faster than expected.

"Usually by the time an individual gets a target letter, the investigation is pretty far down the road and it's an indication that indictments are going to be issued in the relative near term," said John K. Markey, a partner at Mintz Levin Cohn Ferris Glovsky & Popeo PC in Boston, and former federal and state prosecutor.

Markey said that in a target letter, "The Department of Justice is informing an individual or his attorney that it already has substantial evidence of the commission of a federal crime. It usually is a sign that the individual is going to be indicted and it may prompt an attempt at a plea bargain or cooperation deal with the government."

Recipients of target letters also typically are given the opportunity to testify before the grand jury on their behalf without any possibility of immunity, according to another lawyer who did not want to be named.

In this case, the Justice Department entered into an amnesty agreement with the Bank of America last year, providing it amnesty from criminal charges in return for full cooperation in the investigation.

Two of the 10 individuals who received target letters are former JPMorgan employees, even though JPMorgan Chase & Co. did not disclose this in the 10-K filing it released on Friday. They are James L. Hertz and Samuel M. Gruer, former vice presidents in derivatives marketing in the firm's tax-exempt capital markets group. Hertz was discharged from the firm on Dec. 12 and is not currently registered with any firm that is a member of the Financial Industry Regulatory Authority. Gruer left JPMorgan on June 3, 2006, after denying in his regulatory filing that he had engaged in any wrongdoing. He is currently a director of muni structuring, which includes derivatives, at Deutsche Bank AG.

Shlomi Raz, a banker at Goldman, Sachs Inc., who formerly worked at JPMorgan, disclosed in his regulatory filing that he was contacted by the Justice Department regarding the "grand jury investigation concerning possible antitrust and other violations involving contracts related to municipal bonds." A Goldman, Sachs spokesman declined to comment.

Patrick Marsh, managing director and head of muni structuring, which includes derivatives, at Deutsche Bank also received a target letter from the Justice Department on Nov. 30, but denied any wrongdoing, according to his regulatory filing. In addition, Marsh said the SEC staff notified him Nov. 2 that they were considering recommending the commission bring a civil injunctive action and/or administrative proceedings alleging that he violated securities laws in connection with the bidding of various financial instruments during his employment at a prior firm. Marsh previously worked at Bear, Stearns & Co. A Deutsche Bank spokesman declined to comment.

Stephen Salvadore, a senior managing director and manager of municipal capital markets derivatives and investments at Bear, Stearns, disclosed that he received notice from the Justice Department on Jan. 8 that he is a target of the grand jury investigation. He denied that he had engaged in any wrongdoing. A Bear, Stearns spokesman could not be reached for comment.

UBS Securities LLC, said in the regulatory filing for Peter Ghavami, its former global head of commodities who was former managing director and co-manager in the firm's municipal derivatives group before that, left the firm in December ostensibly to take a position at another firm. However, Ghavami's attorney later informed UBS that he had received a target letter from the Justice Department in connection with its muni antitrust investigation on Nov. 30. Ghavami is not currently registered with a FINRA member firm. He could not be reached for comment, and a spokesman at UBS declined to comment.

Mary A. Packer, president of PackerKiss Securities Inc., in San Rafael, Calif., disclosed in her regulatory filing that she was notified by the Justice Department on Dec. 11 that she is a target of the grand jury muni investigation. She denied that she had engaged in any wrongful conduct.

Piper Jaffray & Co., disclosed in the regulatory filing for James H. Towne, former managing director of the firm's municipal derivatives group, that he received a notice from the Justice Department's antitrust division Dec. 15 relating to "potential antitrust and other violations involving contracts related to municipal bonds." And Jay Saunders and Martin McConnell, who worked in the derivatives marketing department at Wachovia Bank NA but are on administrative leave, also were notified by the Justice Department that they were targets in the probe.

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