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Article: SCOTUS Rules That Lawsuit Alleging Naked Short Selling Can Proceed in State Court

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SCOTUS Rules That Lawsuit Alleging Naked Short Selling Can Proceed in State Court

18 May 2016

In a unanimous decision that may lead to an increase in the trend of state court suits involving securities litigation, the US Supreme Court ruled this week that an action related to the short sale of securities could proceed in state court. In Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, the Court held that the exclusive jurisdiction of securities claims in federal court provided by the Securities Exchange Act is limited to claims “arising under” the Exchange Act.

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Web: Overstock.com CEO Patrick Byrne Loses ‘Deep Capture’ Libel Suit

Web

Overstock.com CEO Patrick Byrne Loses ‘Deep Capture’ Libel Suit

Gary Weiss

gary-weiss.com, 7 May 2016

In a scathing decision released on May 6, a Vancouver court found Byrne and his “Deep Capture” fake news venture had fabricated lurid accusations of criminal conduct against a Vancouver businessman named Aly Nazerali. The damage award consists mainly of punitive and aggravated damages, and the judge found that the conduct of Byrne and his minions was so egregious that he slapped a permanent injunction on the defendants.

I’ve written about Byrne quite a bit in the past because he was the very worst of Corporate America, from his bizarre stock-market conspiracy theories to his well-documented accounting games, which he countered by vicious personal attacks on critics and the media. He is a kind of small-bore Donald Trump, a “born on third base who thinks he hit a triple” kind of guy. Byrne lies so frequently and with such gusto that it’s hard to say if he can distinguish fact from fiction. He is on indefinite leave from Overstock because of a Hepatitis C infection, a disease ordinarily caused by intravenous drug use—or, if you believe him, a wound sewn up by “barefoot doctor in China.”

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Article: Overstock and Merrill Lynch settle for $20 million

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Overstock and Merrill Lynch settle for $20 million

Mark Dugdale

Securities Lending Times, 3 February 2016

Overstock.com has ended its long legal battle with a group of broker-dealers after securing a $20 million settlement from the remaining defendant.
Merrill Lynch Professional Clearing Corporation was the last defendant standing in the litigation over allegations of naked short selling, which were first brought in 2007. Merrill Lynch agreed to pay $20 million to Overstock and co-plaintiffs on 28 January to settle the claims, without admitting any liability.

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Article: Case Sheds Light on Goldman’s Role as Lender in Short Sales

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Case Sheds Light on Goldman’s Role as Lender in Short Sales

Gretchen Morgenson

The New York Times, 29 January 2016

It would be easy to overlook the case against Goldman Sachs filed by the Securities and Exchange Commission on Jan. 14. It involved a complex piece of Wall Street plumbing, led to a minuscule $15 million fine and came on the same day that Goldman agreed to pay up to $5 billion to settle prosecutors’ claims that it sold faulty mortgage securities to investors.

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Filing: SEC v Schwab

Filing

SEC v Schwab

19 January 2016

A Charles Schwab Corp subsidiary and a former customer told the U.S. Securities and Exchange Commission Friday that an agency judge overreached when she found them liable for an alleged naked short-selling scheme and ordered them to pay $8.2 million in sanctions.

PDF (3 pages): SEC v Schwab

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Filing: SEC v Goldman Sachs

Filing

SEC v Goldman Sachs

14 January 2016

These proceedings arise out of practices engaged in by Goldman’s Securities Lending Demand Team (the “Demand Team”), between November 2008 and mid-2013, in providing and documenting “locates” to enable its customers to execute short sales.

PDF (8 pages): SEC v Goldman Sachs

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Article: It looks like traders might have manipulated another huge market

Article - Media

It looks like traders might have manipulated another huge market

Portia Crowe

Business Insider, Portia Crowe

A handful of London traders may have rigged the UK-government bond market, according to reports from Global Capital and The Wall Street Journal.
Global Capital reports that regulators have contacted Bank of America Merrill Lynch, Credit Agricole, Credit Suisse, and Nomura in relation to a possible investigation into manipulation in the British-government bond market.

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Article: JPMorgan Asia Units Fined for Regulatory Breaches in Hong Kong

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JPMorgan Asia Units Fined for Regulatory Breaches in Hong Kong

Cathy Kit Ching Chan

Bloomberg, 15 December 2015

JP Morgan Chase & Co. unites were fined HK$30 million ($3.9 million) in Hong Kong for regulatory breaches by the firm’s instituional equities business between 2010 and 2013, including breaking a ban on so-called naked short-selling.

PDF (4 pages): JP Morgan Fine Hong Kong

Ex- Goldman Macro Trader Lim Reopens $1.1 Billion Hedge Fund

Bei Hu

Bloomberg, 2016

Guard Capital Management, the Hong Kong-based firm led by former Goldman Sachs Group Inc. trader Leland Lim, reopened its macro hedge fund to new investors this month after outperforming peers in 2015, said a person with knowledge of the matter.

PDF (4 pages): JP Morgan Fine Hong Kong

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Article: Naked Shorts at the Supreme Court

Article - Media

Naked Shorts at the Supreme Court

Noah Feldman

Bloomberg, 1 December 2015

When you’re trading securities, you generally think about being regulated by the Securities and Exchange Commission and federal law. Should you be worried about state law, too? That question isn’t merely theoretical, as shown by the naked short selling case that was argued Tuesday before the U.S. Supreme Court. The answer has practical consequences for traders of all kinds.

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Article: Finra Fines Deutsche Bank Securities Unit $1.4 Million

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Finra Fines Deutsche Bank Securities Unit $1.4 Million

Ezequiel Manaya

Wall Street Journal, 19 November 2015

Wall Street’s watchdog group said Thursday that it fined Deutsche Bank AG’s securities unit $1.4 million for violating its short interest reporting rule.

The Financial Industry Regulatory Authority, or Finra, said Deutsche Bank had in some cases for more than a decade improperly tracked the number of shares it had borrowed, or padded the total number of securities it held of certain stocks.

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Web: SEC Responses to Frequently Asked Questions Concerning Regulation SHO

Web

SEC Responses to Frequently Asked Questions Concerning Regulation SHO

The following answers to frequently asked questions were prepared by and represent the views of the staff of the Securities and Exchange Commission’s (“Commission”) Division of Trading and Markets (“staff”). They are not rules, regulations, or statements of the Commission, and do not have the approval or disapproval of the Commission.

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Article: Nine banks to pay $2 billion to US investors in rate-rigging case

Article - Media

Nine banks to pay $2 billion to US investors in rate-rigging case

Pinsent Masons, 18 August 2015

Nine of the world’s largest banks have agreed to pay a total of $2 billion in compensation to investors in the US over the manipulation of exchange rates, and to cooperate in litigation against 12 other defendants.

Law firm Hausfeld announced that settlements have been reached with Bank of America, Barclays, BNP Paribas, Citi, Goldman Sachs, HSBC, JPMorgan, RBS, and UBS on behalf of investors.

The banks will now work with the investors in continuing litigation against Credit Suisse Group, Credit Suisse, Credit Suisse Securities, Deutsche Bank, Deutsche Bank Securities, Morgan Stanley, Morgan Stanley & Co, Morgan Stanley & Co. International, Bank of Tokyo-Mitsubishi., RBC Capital Markets, Société Générale and Standard Chartered. Several of these banks were added to the action last month based on facts found during the investigation, Hausfeld said.

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Fined: Goldman Sachs Execution & Clearing Fined by FINRA (July 2015)

Article - Media, Fined

FINRA Fines Goldman Sachs Execution & Clearing, L.P. $1.8 Million for OATS and Trade Reporting Failures

Michelle Ong, Nancy Condon

FINRA.org, 27 July 2015

The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Goldman Sachs Execution & Clearing, L.P. $1.8 million for systemic Order Audit Trail System (OATS) reporting violations spanning a period of more than eight years, failure to accurately submit required trade reports to the appropriate FINRA Trade Reporting Facility (TRF), and related supervisory failures.

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Article: Boston pension fund accuses big banks of manipulating U.S. securities

Article - Media

Boston pension fund accuses big banks of manipulating U.S. securities

Greg Ryan

Boston Business Journal, 24 July 2015

The city of Boston’s pension fund has sued more than 20 of the world’s largest financial companies, claiming they conspired to alter the prices of U.S. Treasury securities they sold to the fund and other investors across the country.

The lawsuit, which was filed in New York federal court on Thursday, targets Merrill Lynch, Goldman Sachs, Morgan Stanley, and Citigroup Global Markets, among other dealers of the securities.

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Article: Goldman Sachs Internal Memo (Yesterday): “Easy to Borrow List to be Discontinued”

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Goldman Sachs Internal Memo (Yesterday): “Easy to Borrow List to be Discontinued”

Patrick Byrne

DeepCapture, 23 July 2015

My battle with Wall Street started off as a fight regarding slop in the settlement system and how it could be used to rig the stock market (the battle later expanded into other areas, including organized crime, economic warfare, and what I felt was an insufficiently proactive regulatory environment, the latter of which, I am happy to say, is showing signs of real improvement). For a decade I have asserted that one of the sources of that slop has been the system that governs short selling. One of the sources of that slop has concerned how hedge funds locate stock to short sell. And one form of that slop originates in the “Easy to Borrow List” that prime brokerages put out each day.

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Comment: Goldman stopped but everyone else still does it.

THE DOLLAR HAS NO INTRINSIC VALUE : DO YOUR ASSETS?