Category: Publications

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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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Article: Fighting back against DH Corp short sellers

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Fighting back against DH Corp short sellers

Jonathan Ratner, 28 October 2015

Financial services firm DH Corp. is the latest Canadian company to come under attack from short sellers. The stock fell sharply on Monday after hedge fund Lawton Park Capital Management accused DH (formerly Davis + Henderson Corp.) of masking weakening performance with “desperate M&A and accounting tricks.”

DH has recovered some of those losses since, but Graham Ryding at TD Securities still sees a very attractive entry point given its current valuation. “The market reaction to short-seller concerns is misplaced,” the analyst told clients, raising his rating on DH to action list buy from buy.

Ryding also maintained a $47 price target on the stock, which represents upside of about 35 per cent, noting that his conviction in the company’s growth outlook and fundamentals is intact. DH management released its third-quarter results early in order to respond to issues raised by Lawton Park.
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Article: DH stock hit hard by offensive from U.S. short seller

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DH stock hit hard by offensive from U.S. short seller

TIM SHUFELT, 27 October 2015

For the second time in a week, a U.S. short-seller has launched an offensive against a large Canadian company, triggering a surge in pessimism and a deep stock sell-off.

On Monday, shares of DH Corp., the financial services firm formerly named Davis + Henderson, swiftly fell in response to a bearish call by a little-known U.S. hedge fund. Over two trading days, the stock fell by as much as 25 per cent as the company fought to dispel the allegations.

A similar frenzy has gripped Valeant Pharmaceuticals International Inc.’s stock over the past week, after a report called the Canadian-listed company a potential “pharmaceutical Enron.” The two episodes could set precedents for U.S. short-sellers willing to stalk ever bigger game, said Jason Donville, chief executive of Toronto-based Donville Kent Asset Management, which owns Valeant shares.

“To trigger a panic on a stock is now relatively easy. If they can just get the ball rolling, it can go a long way down,” he said. “We’ve seen the playbook.”
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Article: DH Corp. defends accounting practices, calls hedge fund report ‘misleading’

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DH Corp. defends accounting practices, calls hedge fund report ‘misleading’

Alexandra Posadzki, 27 October 2015

TORONTO – Financial technology company DH Corp. is defending itself against what it calls a “false and misleading” report from a hedge fund that casts doubts on its growth prospects and past performance. The report by Lawton Park Capital Management alleges the Toronto-based company (TSX:DH) is making “desperate” acquisitions and playing “accounting games” in order to obscure its dwindling performance. The report takes issue with DH’s approach to accounting for its revenue and alleges that “numerous” insiders of the company have been selling their shares, which could indicate trouble brewing that the public isn’t aware of.

DH released its quarterly earnings report earlier than planned and bumped up its conference call to discuss its results, originally slated for Wednesday, to Tuesday morning in order to address the allegations. The company, formerly known as Davis + Henderson in the days when it was primarily known for printing and supplying paper cheques for Canada’s big banks, says investors should rely on its public filings and not the analyst report. DH’s chief financial officer Karen Weaver said the company follows “disciplined accounting practices” that are in accordance with the International Financial Reporting Standards.
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Article: Northwest: Analysis of a Coordinated Short Selling Attack Against the Stock (NWBO, $4.69)

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Northwest: Analysis of a Coordinated Short Selling Attack Against the Stock (NWBO, $4.69)

LARRY SMITH, 20 October 2015

Again I can see some people scoffing at my suggestion of such broad based criminal actions but consider the following. Martin Martola of SAC Capital was sentenced to 9 years in prison because he had paid one of the primary investigators in the phase 3 trial of Elan’s bapineuzumab in Alzheimer’s disease to learn of results before they were made publicly available. The clinical trial investigator tipped Martola that the phase 3 trial was unsuccessful and Martola and his employer SAC Capital executed trades that resulted in $275 million of profits. SAC’s founder Steve Cohen was charged with the same crime, but Martola refused to testify against Cohen and he was not indicted. However, SAC made a $1.8 billion settlement for criminal and civil settlements and agreed not to manage outside money. Continue reading “Article: Northwest: Analysis of a Coordinated Short Selling Attack Against the Stock (NWBO, $4.69)”

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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: Steven Cohen returns to London after insider trading claims

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Steven Cohen returns to London after insider trading claims

Joanna Bourke, 07 October 2015

The US investment firm that oversees billionaire Steven Cohen’s wealth has agreed a deal to return to the UK, its new landlord has said. Two years after closing its London offices amid insider-trading allegations, Point 72 Asset Management will move to St James’s Square in London’s hedge-fund heartland.

The company plans to be operating out of the capital by the first quarter of 2016. It previously employed around 50 people in London. Continue reading “Article: Steven Cohen returns to London after insider trading claims”

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Article: Supreme Court to Decide if “Naked” Short Selling State Law Claim May Be Resolved in State Court

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Supreme Court to Decide if “Naked” Short Selling State Law Claim May Be Resolved in State Court

Lisa Soronen, 21 September 2015

The issue in Merrill Lynch v. Manning is whether state law claims alleging that the “naked” short selling at issue in this case violated state law must be heard in federal court.

In a short sale, a short seller identifies a security he or she believes will decline in value, borrows some of those securities from a broker and sells them. When the securities decline in value he or she rebuys them and makes a profit.

In a “naked” short sale the seller doesn’t borrow the securities in time to deliver them to the buyer—to manipulate the security’s price or to avoid borrowing costs. While “naked” short selling isn’t per se illegal under federal law, some schemes may violate federal antifraud law and Security and Exchange Commission (SEC) rules. Continue reading “Article: Supreme Court to Decide if “Naked” Short Selling State Law Claim May Be Resolved in State Court”

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Article: How Wall Street’s Bankers Stayed Out of Jail

Article - Media

How Wall Street’s Bankers Stayed Out of Jail

The probes into bank fraud leading up to the financial industry’s crash have been quietly closed. Is this justice?

by William D. Cohan

Any narrative of how we got to this point has to start with the so-called Holder Doctrine, a June 1999 memorandum written by the then–deputy attorney general warning of the dangers of prosecuting big banks—a variant of the “too big to fail” argument that has since become so familiar.

. . .extracting large settlements paid with shareholders’ money is not the same as bringing alleged wrongdoers to justice.

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

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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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Article: Barclays, RBS and others settle U$2bn currency-rigging lawsuits

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Barclays, RBS and others settle U$2bn currency-rigging lawsuits

Jonathan Jones, 14 August 2015

HSBC (LON:HSBA), Barclays (LON:BARC), Royal Bank of Scotland (LON:RBS) and two other banks settled on yet more payouts for currency-rigging.

The banks settled with US investors, agreeing to a payout which took the overall total paid to the investors to US$2bn (£1.28bn) from nine banks.

US heavyweight Goldman Sachs and BNP Paribas also settled.

It’s another round of payouts after six banks, including Barclays and RBS were, in May, ordered to pay US$6bn (£3.84bn) by UK and US authorities.

At the time, Barclays was hit with the biggest bank fine in British history.

American investors claimed the banks joined together to manipulate the US$5.3trn a day foreign exchange market.

Legal firm Hausfeld, which represented the investors, said that the agreements were preliminary and subject to approval by US District Judge Lorna Schofield.

As yet, there has been no information on how the sum would be divided between the banks if passed.

“In addition to the billions of dollars in compensation, these settling banks have agreed to cooperate with investors in their continuing litigation” against other institutions, Hausfeld said.

The banks yet to settle are Standard Chartered (LON:STAN), Societe Generale, Bank of Tokyo-Mitsubishi UFJ, RBC Capital Markets, Deutsche Bank, Credit Suisse and Morgan Stanley.

The US$2bn includes earlier settlements of US$800mln, with JPMorgan, Bank of America, UBS and Citigroup.

“While the recoveries here are tremendous, they are just the beginning,” said Hausfeld chairman Michael Hausfeld.

“Investors around the world should take note of the significant recoveries secured in the United States and recognize that these settlements cover a fraction of the world’s largest financial market,” he said.

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Article: RBS, Barclays, HSBC … it’s time to get out of coal!

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RBS, Barclays, HSBC … it’s time to get out of coal!

Greig Aitken BankTrack, 04 August 2015

In advance of the UN climate summit in Paris, campaign groups are urging the banking sector to take one concrete step towards combatting the climate crisis, and quit financing coal.

It is hard to think of a UK business sector in more dire need of an image boost than the banking sector. The UK’s three biggest banks – Royal Bank of Scotland, Barclays and HSBC – appear stuck on a never-ending, Escher-esque scandal treadmill of their own making.

Round and round they go, ripping off small businesses (RBS), enabling Latin American drug cartels to launder billions and orchestrating tax evasion in Switzerland (HSBC), and blatantly mis-selling payment protection insurance to vulnerable customers (Barclays).

This behaviour is of course accompanied by obscene bonuses that the same banks have still seen fit to churn out to staff as regularly as clockwork every year since the 2008 crash.

Reporting from outside RBS’s City of London headquarters in November last year as a further multi-bank scandal concerning illegal foreign exchange rate manipulation was breaking, the Economics Editor of Channel 4 News, Paul Mason, visibly fighting back the expletives, let rip on air:

“I’m just sick of it, after six years why do we have to keep coming to do it?”

He was referring to yet more time spent covering yet more market manipulation, with little in the way of effective sanctions being dished out to prevent it, Mason’s angst summed up the UK public’s views about the banks.

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Article: Valuing Tucows Inc. (TCX) From A Bearish Perspective

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Valuing Tucows Inc. (TCX) From A Bearish Perspective

Sonya Colberg, 03 August 2015

You’ve almost gotta love Tucows Inc. (USA) (NASDAQ:TCX) for its humor, as demonstrated by the company reportedly taking a real cow to a conference, plus its depiction of two cows in its logo. But the negatives inherent in Tucows’ business plan utterly outweigh its funny personality. Continue reading “Article: Valuing Tucows Inc. (TCX) From A Bearish Perspective”

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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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