April 2012 – Financial Treason & Crime

Thomas J. Boulton, Marcus V. Braga-Alves

The Journal of Portfolio Management, 30 April 2012

Boulton and Braga-Alves study persistent failures to deliver (fails) to better understand naked short sellers’ trading strategies, their ability to profit from their trades, and the market’s reaction to information about their activities. Contrary to recent claims that naked short sellers are momentum traders who drive down stock prices, they find that returns are typically positive just prior to periods of increased naked short selling that result in persistent fails and that returns generally remain positive for several weeks afterward.

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04/16/201205/20/2020

Web: SEC Charges optionsXpress and Five Individuals Involved in Abusive Naked Short Selling Scheme

Web

SEC Charges optionsXpress and Five Individuals
Involved in Abusive Naked Short Selling Scheme

SEC, 16 April 2012

The SEC’s Division of Enforcement alleges that Chicago-based optionsXpress failed to satisfy its close-out obligations under Regulation SHO by repeatedly engaging in a series of sham “reset” transactions designed to give the illusion that the firm had purchased securities of like kind and quantity. The firm and customer Jonathan I. Feldman engaged in these sham reset transactions in a number of securities, resulting in continuous failures to deliver. Regulation SHO requires the delivery of equity securities to a registered clearing agency when delivery is due, generally three days after the trade date (T+3). If no delivery is made by that time, the firm must purchase or borrow the securities to close out the failure-to-deliver position by no later than the beginning of regular trading hours on the next day (T+4).

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04/16/201203/23/2021

Article: SEC charges OptionsXpress over naked short selling

Article - Media, Publications

SEC charges OptionsXpress over naked short selling

Reuters Staff, 16 April 2012

April 16 (Reuters) – The online brokerage OptionsXpress and five individuals were charged by the U.S. Securities and Exchange Commission with involvement in an abusive naked short-selling scheme.

The SEC on Monday said the scheme involved a series of sham transactions, violating a regulation requiring that equity securities be delivered when due.

Four OptionsXpress officers and a customer were charged by the SEC. Three of the officials settled without admitting or denying the regulator’s findings.

The SEC said the misconduct lasted from at least October 2008 to March 2010. Charles Schwab Corp bought OptionsXpress last year.

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04/12/201205/16/2020

Fined: Goldman Sachs & Co. Fined by FINRA (April 2012)

Article - Media, Fined

Goldman, Sachs & Co. Fined $22 Million for Supervisory Failures Relating to Trading and Equity Research

Michelle Ong, Nancy Condon

FINRA, 12 April 2012

The Financial Industry Regulatory Authority (FINRA) today announced that it has fined Goldman, Sachs & Co. $22 million for failing to supervise equity research analyst communications with traders and clients and for failing to adequately monitor trading in advance of published research changes to detect and prevent possible information breaches by its research analysts. The Securities and Exchange Commission (SEC) today announced a related settlement with Goldman. Pursuant to the settlements, Goldman will pay $11 million each to FINRA and the SEC.

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04/12/201204/26/2020

Article: ‘Naked short selling’ probed in new documentary

Article - Media

‘Naked short selling’ probed in new documentary

Joe Meyers

ctpost, 12 April 2012

Years before the financial collapse of 2008, Greenwich writer-director Kristina Leigh Copeland was digging into Wall Street irregularities that she believed could have a devastating impact on the economy.

Along the way, however, her fictional screenplay, “Blue Chip,” evolved into the new documentary “Wall Street Conspiracy,” which Copeland sees as the first in a series of muckraking nonfiction movies about issues with global impact.

04/04/201204/08/2021

Article: “Naked” ban deals further blow to CDS

Article - Media, Publications

“Naked” ban deals further blow to CDS

Christopher Whittall, 04 April 2012

A ban on “naked” sovereign credit defaults swaps trading will be stricter and more far-reaching than market participants had previously thought and could severely damage market liquidity, analysts have warned.

The European Union recently published the final version of new regulation prohibiting participants from using CDS to take outright short positions in sovereigns. The regulation developed in the aftermath of various European politicians blaming sovereign CDS for peripheral bond yields widening during the euro zone crisis, despite a lack of empirical evidence to support these claims.