Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
Robert W. Baird & Co. Incorporated Fined by FINRA
7 June 2019
An AWC was issued in which the firm was censured and fined $150,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it published seven research reports about an issuer without disclosing that the research analyst who authored the reports was engaged in employment discussions with the issuer that constituted an actual, material conflict of interest.
Nomura Securities International, Inc. Fined by FINRA
3 June 2019
An AWC was issued in which the firm was censured and fined $225,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to report and inaccurately reported reportable over-thecounter (OTC) options positions to the Large Options Position Reporting system (LOPR) and untimely reported options positions to the FINRA Trade Reporting Facility®.
Lime Brokerage LLC Fined by FINRA
3 June 2019
A Letter of Acceptance, Waiver and Consent (AWC) was issued in which the firm was censured and fined $75,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to accurately calculate its net capital resulting in net capital deficiencies in amounts ranging from $3,348 to $449,666. The findings stated that the firm improperly calculated its customer reserve formula on one occasion and, as a result, failed to make a sufficient deposit in its reserve account, resulting in a hindsight deficiency of $59,590 for one month.
Larry Smith
Smith On Stocks, 31 May 2019
There is an integral relationship between the DTCC and hedge funds. The DTCC is owned by Prime Brokers; these are Goldman Sachs, Morgan Stanley, Merrell Lynch and other household name investment banks. Prime Brokers provide basic services to hedge funds that allow them to trade with multiple brokerage houses while maintaining a centralized master account at their prime broker containing cash and securities. The prime broker offers stock loan services, portfolio reporting, consolidated cash management and other services. Hedge fund support is a very meaningful percentage of the net income of Prime Brokers.
22 May 2019
Pawar Law Group announces that a class action lawsuit has been filed on behalf of shareholders who purchased shares of American Renal Associates Holdings, Inc. (NYSE:ARA) from August 10, 2016 through March 27, 2019, inclusive (the “Class Period”). The lawsuit seeks to recover damages for American Renal investors under the federal securities laws.
Southeast Investments, N.C., Inc. Fined by FINRA
28 May 2019
The firm and Black appealed a National Adjudicatory Council (NAC) decision to the Securities and Exchange Commission (SEC). The firm was fined a total of $146,500, of which $73,500 is joint and several with Black. Black was barred from association with any FINRA® member in any capacity. The NAC affirmed in part and reversed in part the findings and affirmed in part, vacated in part and modified in part the sanctions imposed by the Office of Hearing Officers (OHO).
Larry Smith
Smith On Stock, 22 May 2019
In previous blogs I traced the history of stock trading from the 1960s when stock certificates and cash were physically exchanged to settle trades to the paper free, totally electronic system that exists today. Instead of owning stock certificates, we now own digital entries located somewhere in the vaults of the inscrutable Depository Trust and Clearing Corporation (DTCC). This electronic system is absolutely critical to the functioning of our capital markets and our strong economic system. However, the DTCC and the prime brokers who own it have made the clearing and settlement system virtually non-transparent. This enables the routine manipulation of primarily but not exclusively, small stocks through illegal naked shorting.
The Banks That Ran Uber’s IPO Feared This Would Happen
Josh Barro
NY Mag, 17 May 2019
Matt Levine, among others, has been writing about the extraordinary measures that the investment banks running Uber’s initial public offering took, in vain, to stop the stock from tumbling in its first few days on the stock market.
How Naked Short-Selling Helped Support Uber’s Flailing Stock
Evan Niu
The Motley Fool, 15 May 2019
The public debut of the largest ridesharing company, Uber (NYSE:UBER), has not gone well. Widespread investor pessimism over the sustainability of ridesharing economics helped push shares down after going public last Friday, following the IPO pricing at the low range of expectations. An estimated 81% of the equity capital that Uber raised in the private markets is now sitting in the red, according to Axios.
Uber’s underwriters were apparently so concerned about the debut that they made a rare move: naked short-selling.
As Morgan Stanley’s “Nuclear Option” Failed, Uber Stock Plunged
ZeroHedge, 14 May 2019
Uber’s underwriters, led by Morgan Stanley, were so (rightfully) worried that the company’s IPO was going to crater in the days after its public offering, they deployed what CNBC is calling “a nuclear option” and shorted IPO stock naked, even beyond the traditional greenshoe. Of course, anyone in the industry would simply call this “selling to the dumb money ahead of an obviously overpriced IPO,” but we digress.
This naked shorting is utilized as a tactic to “support the stock” in addition to the usual 15% greenshoe that underwriters overallocate just so they can cover into, if the stock is plunging, with hopes of stabilizing the drop (Morgan Stanley was also Uber’s very much ineffective stabilization agent). CNBC referred to the short covering as “a technique that goes above and beyond the traditional help a new offering can get.”
Uber underwriters worried about the IPO deployed unusual ‘naked short’ tactic to support the stock
Leslie Picker, Hugh Son
CNBC, 14 May 2019
Uber’s underwriters, led by Morgan Stanley, were so worried the company’s initial public offering had run into trouble, they deployed a nuclear option ahead of the deal last week, so they could provide extra support for the stock, four people with knowledge of the move said.
Thornton Mcenery
Dealbreaker, 14 May 2019
Uber’s appeal as a public company at this stage of its life has always been a mystery to us, yet even we are a little shocked that the bankers taking it to market were so sure it was priced to drop that they went through the trouble of building a naked short into the IPO and then sold that decision to investors as what we can only define as “Dipshit Insurance.”
Woodbury Financial Services, Inc. Fined by FINRA
13 May 2019
An AWC was issued in which the firm was censured and fined $225,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that its system for supervising additions to existing variable annuities was not reasonably designed to achieve compliance with applicable securities laws and FINRA rules, including those governing suitability.
Oriental Financial Services Corp. Fined by FINRA
13 May 2019
An AWC was issued in which the firm was censured and fined $20,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it included language conditioning the settlement of two arbitration proceedings on the customers’ agreements to consent to, and not to oppose, expungement of their claims from the CRD® system.
FIS Brokerage & Securities LLC Fined by FINRA
7 May 2019
An AWC was issued in which the firm was censured and fined $25,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it submitted Reportable Order Events (ROEs) to the Order Audit Trail System (OATS™) that contained inaccurate, incomplete, or improperly formatted data. The findings stated that the firm used a platform for its OATS reporting that was provided by a third-party vendor. The OATS violations were caused by system errors that developed when the firm’s vendor made changes to its platform. The errors were later remediated.
THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?
