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Notre Dame's College of Business Administration

Paul Schultz, who joined the College of Business Administration last fall as Clarke Professor of Finance, collaborated with Vanderbilt University's William Christie on a landmark study of pricing patterns in 1994 that led to a class-action lawsuit alleging price-fixing on the Nasdaq stock exchange. The suit was settled in late 1997 for about $1 billion.

Christie and Schultz's article exposing the practice, published in the Journal of Finance, showed that with 70 of the 100 most heavily traded stocks, Nasdaq dealers were avoiding quoting prices in odd eights of a dollar. Instead, shares were far more likely to be quoted in quarters. That raised the possibility that the dealers were tacitly colluding to keep the gap between the price they paid for a share and the price at which they sold it (the so-called "bid-ask" spread) wider than it could have been in a truly competitive market. Such actions would increase dealer profits while making it more expensive for the public to buy and sell Nasdaq stocks.

In addition to the landmark settlement, the researchers' work led to major changes in the rules governing share trading in the United States, most of which affected Nasdaq, the world's second-largest stock market.

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