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Article: FERC probes JPMorgan over electricity charges

Article - Media

FERC probes JPMorgan over electricity charges

Katarzyna Klimasinska

SF Gate, 3 July 2012

JPMorgan Chase & Co. is being investigated over potential power-market manipulation that inflated payments for electricity, according to the U.S. Federal Energy Regulatory Commission.

FERC, which has pledged to combat manipulation of prices, began its probe after reports last year of bidding practices by JPMorgan that were deemed abusive by California and Midwest grid operators, according to documents provided by the agency.

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Article: Naked Short Selling is Real – And It’s Fucking Up Our Economy

Article - Media

Naked Short Selling is Real – And It’s Fucking Up Our Economy

Ben Makuch

Vice, 27 June 2012

Unfortunately, like many people out there, I don’t know my ass from my elbow when it comes to the economy. Sure I know a few terms like “recession” and “stock,” but ask me to explain stuff like the “Eurozone crisis” and I’ll get as far as “Apocalyptic omen.” That’s probably why businessmen can get away with pretty much anything; half of their concepts are so convoluted you need to have at least gave a shit about high school calculus to understand them, which most of us didn’t.

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Article: Lawyers For The Major Banks Accidentally Leaked E-mails About Their Clients Naked Short-Selling Overstock.com

Article - Media

Lawyers For The Major Banks Accidentally Leaked E-mails About Their Clients Naked Short-Selling Overstock.com

Linette Lopez

Business Insider, 16 May 2012

For years, Overstock.com has been in a legal battle with Goldman Sachs, Bank of America, Merrill Lynch and more. The online retailer accuses the banks of naked short-selling its stock.

Overstock.com lost that battle, but they’re still trying to get the banks to unseal documents that would prove their case.

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Article: Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’

Article - Media

Accidentally Released – and Incredibly Embarrassing – Documents Show How Goldman et al Engaged in ‘Naked Short Selling’

Matt Taibbi

Rolling Stone, 15 May 2012

The lawyers for Goldman and Bank of America/Merrill Lynch have been involved in a legal battle for some time – primarily with the retail giant Overstock.com, but also with Rolling Stone, the Economist, Bloomberg, and the New York Times. The banks have been fighting us to keep sealed certain documents that surfaced in the discovery process of an ultimately unsuccessful lawsuit filed by Overstock against the banks.

Last week, in response to an Overstock.com motion to unseal certain documents, the banks’ lawyers, apparently accidentally, filed an unredacted version of Overstock’s motion as an exhibit in their declaration of opposition to that motion. In doing so, they inadvertently entered into the public record a sort of greatest-hits selection of the very material they’ve been fighting for years to keep sealed.

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Article: The Emperor is Naked: David Stockman

Article - Media

The Emperor is Naked: David Stockman

Karen Roche, JT Long

The Gold Report cited by NASDAQ.com, 4 May 2012

A “paralyzed” Federal Reserve Bank, in its “final days,” held hostage by Wall Street “robots” trading in markets that are “artificially medicated” are just a few of the bleak observations shared by David Stockman, former Republican U.S. Congressman and director of the Office of Management and Budget. He is also a founding partner of Heartland Industrial Partners and the author of The Triumph of Politics: Why Reagan’s Revolution Failed and the soon-to-be released The Great Deformation: How Crony Capitalism Corrupts Free Markets and Democracy.The Gold Report caught up with Stockman for this exclusive interview at the recent Recovery Reality Check conference.

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Article: Naked Short Selling and Market Returns

Article - Academic

Naked Short Selling and Market Returns

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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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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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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Article: Anger at Goldman Still Simmers

Article - Media

Anger at Goldman Still Simmers

Gretchen Morgenson

New York Times cited by RGM Communications via Wayback, 26 March 2012

Just before the financial crisis began in September 2008, a prominent hedge fund appeared well positioned to take advantage of any turmoil in the markets. That fund, Copper River Partners, had made sizable bets months earlier against companies whose stocks it expected to suffer.

Within weeks, however, Copper River, once a successful $1.5 billion hedge fund, was out of business, having unexpectedly absorbed losses on the very bets it thought would be profitable.

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Article: The impact of naked short selling on the securities lending and equity market

Article - Academic

The impact of naked short selling on the securities lending and equity market

Steven Lecce, Andrew Lepone, Michael D. McKenzie, Reuben Segara

Journal of Financial Markets, 1 February 2012

This paper examines the impact of naked short selling on equity markets where it is restricted to securities on an approved list. Consistent with Miller’s (1977) intuition, stocks with the highest dispersion of opinions and short sale constraints are the only stocks to exhibit significant and negative abnormal returns in the post-event period. We also find slightly higher stock return volatility and a small reduction in liquidity when naked short sales are allowed. Overall, it impairs market quality (liquidity and volatility), although there appears to be some improvement in price efficiency in stocks with high short sale constraints.

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Filing: FINRA v Credit Suisse

Filing

FINRA v Credit Suisse

13 December 2011

Pursuant to FINRA Rule 9216 of FINRA’s Code of Procedure, the Respondent submits this Letter of Acceptance, Waiver and Consent (“AWC”) for the purpose of proposing a settlement of the alleged rule violations described below. This AWC is submitted on the condition that, if accepted, FINRA will not bring any future actions against the Respondent alleging violations based on the same factual findings described herein.

PDF (22 pages): FINRA v Credit Suisse

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Article: Merrill Lynch fined for violating cotton-speculation limits

Article - Media

Merrill Lynch fined for violating cotton-speculation limits

Kevin G. Hall

McClatchy Newspapers, 7 December  2011

A key financial regulator said Wednesday that it had fined Wall Street powerhouse Merrill Lynch $350,000 for violating rules that limit how many speculative contracts it can hold in markets where bets are made on the price of cotton for future delivery.

The Commodity Futures Trading Commission said that Merrill Lynch Commodities Inc., a subsidiary of Bank of America, repeatedly had violated limits on how many Cotton No. 2 futures contracts it was allowed to hold. Futures are bets on where the price of a given commodity will be for future delivery.

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Filing: SEC v Citigroup

Filing

SEC v Citigroup

28 November 2011

On October 19, 2011, the U.S. Securities and Exchange Commission
(the “S.E.C.”) filed this lawsuit, accusing defendant Citigroup
Global Markets Inc. (“Citigroup”) of a substantial securities fraud.
According to the S.E.C.’s Complaint, after Citigroup realized in
early 2007 that the market for mortgage-backed securities was
beginning to weaken, Citigroup created a billion-dollar Fund (known
as “Class V Funding III”) that allowed it to dump some dubious assets
on misinformed investors.

PDF (15 pages): SEC v Citigroup

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