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Article: As China stocks sink, some accuse Morgan Stanley, other foreign forces

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As China stocks sink, some accuse Morgan Stanley, other foreign forces

Laura  He

MarketWatch, 3 July 2015

The recent, drastic stock-market meltdown in China seems to have freaked out the country’s government and central bank, as their repeated efforts to stabilize the markets have failed, at least so far.

And now, some segments of Chinese society are now raising the possibility that “evil” market forces going short to ruin the economy, and even suspecting investment “predators” of lurking behind the turmoil, with Morgan Stanley among the names mentioned.

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Article: Supreme Court to Hear Appeal of Third Circuit ‘Naked’ Short Selling Securities Suit

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Supreme Court to Hear Appeal of Third Circuit ‘Naked’ Short Selling Securities Suit

Timothy Raub

LexisNexis, 30 June 2015

The U.S. Supreme Court today agreed to hear an appeal of a Third Circuit U.S. Court of Appeals ruling remanding a securities class action lawsuit over the alleged illegal “naked” short selling of a company’s stock back to state court Merrill Lynch, Pierce, Fenner & Smith Inc., et al. v. Greg Manning, et al., No. 14-1132, U.S. Sup.

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Article: High Court To Hear Merrill Lynch Naked Short Selling Suit

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High Court To Hear Merrill Lynch Naked Short Selling Suit

Law360, 30 June 2015

In a short order, the high court granted the banks’ petition for a writ of certiorari, which was filed over a Third Circuit decision to remand the shareholder suit to state court. The justices also granted the Securities Industry and Financial Markets Association leave to file an amicus brief in the matter.

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Article: Merrill Lynch Fined for Supervisory Failures Leading to Ponzo Scheme

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Merrill Lynch Fined for Supervisory Failures Leading to Ponzo Scheme

Nicholas Guiliano

Securities Arbitration Attorneys, 20 June 2015

Bank of America subsidiary Merrill Lynch, Pierce, Fenner & Smith Inc. has been fined $1 million by the Financial Industry Regulatory Authority, or FINRA, for failure to supervise one of its stockbrokers at its branch office in San Antonio, Texas. FINRA announced the fine on Oct. 4.

Bruce Edward Hammonds, a registered representative with the firm, used a Merrill Lynch account to operate a Ponzi scheme, luring 11 people to invest more than $1 million in B&J Partnership, an entity he ran for over 10 months, according to information released by FINRA. Hammonds request to open a business account for B&J was approved by Merrill Lynch supervisors, who subsequently failed to monitor the funds that the investors deposited and Hammonds withdrew. He was fired by Merrill Lynch in June 2008.

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Article: UBS Fined $12M for System Failures Surrounding Nakes Short Selling

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UBS Fined $12M for System Failures Surrounding Nakes Short Selling

Nicholas Guiliano

Securities Arbitration Attorneys, 20 June 2015

UBS Securities LLC was fined $12 million and censured by the Financial Industry Regulatory Authority, or FINRA, for widespread system deficiencies and a failure to supervise that led to tens of millions of improper short sales.

The firm violated federal securities laws and FINRA rules at various times from January 2005 through March 2010, with several violations continuing through the end of 2010. The violations included improperly excepting short sales from the rules and the improper inclusion of securities in short sales that should have been off limits.

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Article: Illegal Naked Short Selling Appears to Lie at the Heart of an Extensive Stock Manipulation Scheme

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Illegal Naked Short Selling Appears to Lie at the Heart of an Extensive Stock Manipulation Scheme

Larry Smith

SmithOnStocks, 16 June 2015

Only a motivated enforcement agency with subpoena power and an accompanying powerful enforcement infrastructure can prove that naked shorting is at the heart of an extensive stock manipulation scheme. However, I believe that the observational evidence is overwhelming that naked shorting practices are widely used to manipulate the stock prices of emerging biotechnology companies as well as many other small and large companies. Unfortunately, naked shorting is an investment variable that investors must understand if they are going to make investments in the emerging biotechnology space in particular and the equity markets in general.

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Article: How to Handle a Short Attack on a Stock You Own

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How to Handle a Short Attack on a Stock You Own

Keith Fitz-Gerald

TotalWealth, 3 June2015

An anonymous individual writing under the name “The Pump Stopper” launched a vicious attack on Ekso Bionics Holdings Inc. (OTC:EKSO) yesterday that immediately pressured the stock and caused it to drop 24.28% to close at $1.36 a share on heavy volume. Understandably, that makes a lot of people nervous.

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Comment: This appears to be a stellar example of a life-saving vital technology company being destroyed by collusion between a placement agent and naked short sellers.

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Release: Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement

Release

Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement

SEC, 1 June 2015

The Securities and Exchange Commission today charged two Merrill Lynch entities with using inaccurate data in the course of executing short sale orders. Merrill Lynch agreed to admit wrongdoing, pay nearly $11 million, and retain an independent compliance consultant in order to settle the charges.

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Article: BofA’s Merrill fined $11m over short selling

Article - Media

BofA’s Merrill fined $11m over short selling

Ben McLannahan

Financial Times, 1 June 2015

The Securities and Exchange Commission has fined Bank of America’s Merrill Lynch unit $11m for failing to keep proper records of stock available to borrow, after irregular trades were carried out over at least six years.

The case relates to short selling — or betting that the price of a stock will fall — in which investors such as hedge funds ask their brokers to find stock to borrow, which they then sell, hoping to buy it back later for less.

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Article: Merrill Lynch Fined by FINRA

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SEC charges Merrill Lynch, fines firm $11 million for short sales violations

Francine McKenna

MarketWatch, 1 June 2015

The Securities and Exchange Commission announced charges Monday against Bank of America’s Merrill Lynch subsidiary for using bad data since 2012 to “locate” stock for short sales, violating Rule 203(b) of Regulation SHO. That rule prevents “naked” short sales, shorting shares that are not “easy to borrow.” The firm admitted the wrongdoing and will pay a $9 million penalty plus interest and give up $1.6 million in profits. Merrill Lynch must also submit to a compliance review by an independent consultant.

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Filing: SEC v Merrill Lynch

Filing

SEC v Merrill Lynch

1 June 2015

These proceedings concern Merrill’s violations of Regulation SHO (Reg SHO”) of the Exchange Act, in connection with its practices relating to its execution of short sales. As described more fully below, the violations arose from two separate issues concerning Merrill’s use of its “easy to borrow” lists.

PDF (11 pages): SEC v Merrill Lynch

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Filing: FINRA v Morgan Stanley

Filing

FINRA v Morgan Stanley

13 May 2015

Based on the foregoing reviews, the staff determined that the firm violated FINRA Rule 4560, NASD Rule 3360, NYSE Rule 421, FINRA Rule 2010, NASD Rule 2110, NASD Rule 3010, and SEC Rule 200(1). Specifically, the staff determined the firm failed to submit accurate short interest reports during certain short interest reporting periods and failed to provide a supervisory system reasonably designed to achieve compliance with short interest reporting requirements.

PDF (10 pages): FINRA v Morgan Stanley

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Article: Financial Conduct Authority Fines Merrill Lynch International $20 Million

Article - Media

Financial Conduct Authority Fines Merrill Lynch International $20 Million

Corporate Crime Reporter, 22 April 2015

The Financial Conduct Authority (FCA) has fined Merrill Lynch International $20 million for incorrectly reporting 35,034,810 transactions and failing to report another 121,387 transactions between November 2007 and November 2014.

The size of the fine – the highest imposed for transaction reporting failures to date – reflects the severity of Merrill Lynch’s misconduct, failure to adequately address the root causes over several years despite substantial FCA guidance to the industry and a poor history of transaction reporting compliance, consisting of a private warning issued in 2002 and a fine of $225,000 in 2006.

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Article: JP Morgan Agrees New Settlement for FX Manipulation

Article - Media

JP Morgan Agrees New Settlement for FX Manipulation

Profit & Loss, 7 January 2015

JP Morgan has agreed a settlement, believed to be worth $100 million, in an antitrust litigation lawsuit brought against 12 major banks for alleged manipulation of the FX market.

The bank submitted a letter to judge Lorna Scholfield of the Court of the Southern District of New York, stating that it had reached a settlement agreement with the plaintiffs in this litigation and that is planning to file a copy of the settlement terms with the court for approval by the end of January.

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