New Mexico State Investment Council v Bank of America


New Mexico State Investment Council v Bank of America

Since 2005, the Wall Street banks that comprise the major dealers of credit default swaps (“CDS”) have been engaged in a conspiracy to manipulate the CDS “final auction price,” the benchmark price used to value all CDS contracts market-wide at settlement.

PDF (133 pages): New Mexico State Investment Council v Bank of America




21 December 2020

These proceedings concern Cormark’s role in repeatedly causing a U.S. executing broker (the “Executing Broker”) to violate the order-marking and locate requirements of Regulation SHO of the Exchange Act.

From August 2016 to October 2017 (the “relevant period”), Cormark entered more than 200 sale orders for a hedge fund customer (the “Hedge Fund”) into an intermediary broker’s execution management system as “long” orders.2 At the time these orders were entered, the Hedge Fund was not “deemed to own” the stock being sold and did not have a net long position in the stock. Thus, the orders should have been marked as “short” sales under Regulation SHO. The intermediary broker, ITG Canada Corp. (“ITG Canada”), routed the sale orders, with the incorrect order-marking information provided by Cormark, to the Executing Broker, which in turn executed the orders as “long” sales on U.S. exchanges. As a result, Cormark caused the Executing Broker to mismark sale orders as “long,” in violation of Rule 200(g) of Regulation SHO.



Filing: CFTC v Morgan Stanley


CFTC v Morgan Stanley

CFTC, 30 September 2019

The Commodity Futures Trading Commission (“Commission”) has reason to believe that during the period from in or about November 2013 to at least November 2014 (“Relevant Period”), Morgan Stanley Capital Group Inc., (“Morgan Stanley” or “Respondent”) violated Section 4c(a)(5)(C) of the Commodity Exchange Act (the “Act”), 7 U.S.C. § 6c(a)(5)(C) (2012). Therefore, the Commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted to determine whether Respondent engaged in the violations set forth herein and to determine whether any order should be issued imposing remedial sanctions.

PDF (7 pages): CFTC v Morgan Stanley

Filing: Gamma vs Merrill Lynch, Morgan Stanley


Gamma vs Merrill Lynch, Morgan Stanley

CourtListener, 27 June 2019

This action arises from Defendants’ unlawful and intentional manipulation of COMEX Gold Futures, COMEX Silver Futures, NYMEX Platinum Futures, and NYMEX Palladium Futures contracts, and options on those futures contracts (collectively, “precious metals futures contracts”) traded on the New York Mercantile Exchange (“NYMEX”) and the Commodity Exchange, Inc. (“COMEX”) from approximately January 1, 2008 through December 31, 2014 (the “Class Period”) in violation of the Commodity Exchange Act, 7 U.S.C. §§ 1, et seq. (the “CEA”) and the common law.

PDF (29 pages): Gamma vs Merrill Lynch, Morgan Stanley

Filing: SEC v Merrill Lynch


SEC v Merrill Lynch

23 June 2016

Broker-dealers are required to be diligent stewards of the cash and securities entrusted to them by their customers. This basic principle is embodied in Exchange Act Rule 15c3-3, known as the Customer Protection Rule (“Rule”). The Rule requires broker-dealers to safeguard both the cash and securities of their customers so that customer assets can be quickly returned if the firm fails. In broad strokes, a broker-dealer cannot use customer assets to finance the business activities of the firm, and it cannot place customer assets in locations or accounts that make them vulnerable to claims made against the broker-dealer by third parties.

PDF (23 pages): SEC v Merrill Lynch


Filing: SEC v Schwab


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

Filing: SEC v Goldman Sachs


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

Filing: SEC v Merrill Lynch


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

Filing: FINRA v Morgan Stanley


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

Filing: v Goldman Sachs & Co

Filing v Goldman Sachs & Co

13 November 2014

Often, it is the federal courts, applying federal law, that wrestle with claims of cross-state securities fraud involving a nationally-listed stock. Here, plaintiffs of various states allege defendants, securities firms headquartered on the East Coast, violated California and New Jersey law through their involvement in massive naked short selling of Overstock shares. The trial court sustained demurrers to plaintiffs’ New Jersey Racketeer Influence and Corrupt Organizations (RICO) claim without leave to amend and subsequently granted summary judgment on plaintiffs’ California market manipulation claims.

PDF (61 pages): v Goldman Sachs & Co

Filing: FINRA v Merrill Lynch


FINRA v Merrill Lynch

27 October 2014

Between approximately July 1, 2008 through July 2012, MLPRO failed to establish, maintain and enforce adequate supervisory systems and procedures, including in some instances written supervisory procedures, that were reasonably designed to ensure compliance with applicable securities laws and regulations including Regulation SHO, the 2008 Emergency Orders issued by the SEC and anti-money laundering requirements.

PDF (20 pages): FINRA v Merrill Lynch

Filing: Anschutz Corp. v. Merrill Lynch & Co., Inc., 11-1305


Anschutz Corp. v. Merrill Lynch & Co., Inc., 11-1305

FindLaw, 14 August 2012

In a suit against Merrill Lynch and others, claiming market manipulation, fraud, control person liability, and negligent misrepresentation, district court’s judgment in favor of the defendants is affirmed where: 1) the market manipulation claims fail for the same reasons identified in Wilson v. Merrill Lynch & Co., which held that the same website disclosure at issue in this case contained sufficient information about Merrill Lynch’s support bidding practices to preclude a market manipulation claim; 2) district court properly dismissed the California Corporations Code claims as plaintiff fails to allege any injury or unlawful conduct in California; and 3) district court properly dismissed the negligent misrepresentation claims against the Rating Agency defendants as plaintiff fails to allege an actionable misrepresentation under New York law.

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Filing: FINRA v Credit Suisse


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

Filing: SEC v Citigroup


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

Filing: FINRA v UBS



24 October 2011

As set forth below, the Firm failed to comply with certain requirements of Reg SHO, FINRA Rules, NASD Rules and federal securities laws during the period covering, in whole or in part, January 3, 2005 through March 2010, with several violations continuing through December 31, 2010 (the “Relevant Period”), The Firm’s violations existed for various periods of time throughout the Relevant Period and are summarized below.

PDF (26 pages): FINRA v UBS