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Article: UBS comes up short; fined $12 million by Finra for ‘systemic supervisory failure’

Article - Media, Publications

UBS comes up short; fined $12 million by Finra for ‘systemic supervisory failure’

Finextra, 26 October 2011

The Financial Industry Regulatory Authority (Finra) has fined UBS Securities $12 million for failing to properly supervise short sales of securities.

The Swiss bank’s US brokerage unit violated Regulation SHO, which requires a broker-dealer to have reasonable grounds to believe that the security could be borrowed and available for delivery before accepting or effecting a short sale order, says Finra.

The rules require firms to obtain and document this “locate” information before the short sale occurs to help cut the number of potential failures to deliver.
Continue reading “Article: UBS comes up short; fined $12 million by Finra for ‘systemic supervisory failure’”

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Article: UBS fined in U.S. over improper short sales

Article - Media, Publications

UBS fined in U.S. over improper short sales

Jonathan Stempel, 25 October 2011

In the largest penalty of its type, Swiss bank UBS AG was fined $12 million by a U.S. brokerage regulator over its “systemic” failure to properly handle millions of short-sale orders.

The Financial Industry Regulatory Authority said violations by the bank’s UBS Securities LLC broker-dealer unit caused the orders to be mismarked or filled without reasonable grounds to believe the underlying securities could be located.

In short sales, investors sell securities they do not own, hoping the prices will fall so they can repurchase the securities later at the lower price, repay the lender and pocket the difference as profit. Regulators fear that abuses can distort markets, and accelerate declines in share prices. Continue reading “Article: UBS fined in U.S. over improper short sales”

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Filing: FINRA v UBS

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

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Testimony: Kauffman Foundation on ETFs Danger to Capital Formation

Testimony

ETFs and the Present Danger to Capital Formation

Prepared Testimony by Harold Bradley and Robert E. Litan

Before the United States Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on Securities, Insurance, and Investments

ETFs have increasingly distorted the role of equities
markets in capital formation, while posing systemic risks from potential
settlement failures.

Continue reading “Testimony: Kauffman Foundation on ETFs Danger to Capital Formation”

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Article: Why I Respectfully Disagree With David Einhorn About Green Mountain Coffee Roasters

Article - Media

Why I Respectfully Disagree With David Einhorn About Green Mountain Coffee Roasters

Bill Maurer

SeekingAlpha, 19 October 2011

Shares of coffee giant Green Mountain (NASDAQ:GMCR) were slammed on Monday after hedge fund investor David Einhorn said that the stock should be shorted. I respectfully disagree with Mr. Einhorn and others that are against the stock.

Paywall Access to Full Article

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Article: SEC under Schapiro struggles to turn around amid political, financial head winds

Article - Media

SEC under Schapiro struggles to turn around amid political, financial head winds

David S. Hilzenrath

Washington Post, 7 October 2011

Mary L. Schapiro took over a discredited SEC in early 2009 and vowed to rebuild it.

She promised tougher enforcement — “war without quarter” on financial fraud. Modernized rules to keep up with Wall Street. And a new, more effective organization.

Her tenure at the federal agency responsible for protecting investors and policing markets offers a Washington lesson: Even when epic crises create a sense of urgency, it is tough to tighten the reins on powerful industries. Dramatic results can prove elusive.

Read full article.

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Article: United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule

Article - Media, Publications

United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule

Maxwell K. Multer,  01 September 2011

Regulators have addressed market manipulation with Rule 10b-5 since its promulgation under the Securities Exchange Act in 1942. While Section 9 of the Securities Exchange Act addresses manipulation of securities prices, it requires the specific intent “for the purpose of inducing the purchase or sale of such security by others”1 or “for the purpose of creating a false or misleading appearance [of market activity] . . ..”2 It is likely for that reason that prosecutors rarely use Section 9, choosing instead to bring manipulation proceedings under Rule 10b-5.3 But as the tools available for accomplishing market manipulation have evolved, the judicially narrowed contours of Rule 10b-5 may be such that certain new schemes escape liability. With modern advances in trade execution, market platforms and derivatives, it is now possible to accomplish a profitable market manipulation without engaging in any overtly fraudulent or illegal behavior.

Several courts have elected to distinguish between these alleged schemes and schemes which do include illegal behavior, employing a higher level of scrutiny and requiring proof of additional elements in the former situation. Manipulative schemes are referred to as “open market manipulations” when the alleged scheme is accomplished solely through the use of facially legitimate open market transactions. That is, where the manipulator has not engaged in any conduct that is inherently or otherwise illegal, such as fictitious transactions, wash sales or by disseminating false reporting. The transactions are seemingly legitimate, but for their manipulative intent and effect in combination. Continue reading “Article: United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule”

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Article: How the Australian Ban on Short Selling During the GFC Affected Market Quality and Volatility

Article - Academic

How the Australian Ban on Short Selling During the GFC Affected Market Quality and Volatility

Thomas Henker, Julia Henker, Uwe Helmes

2012 Financial Markets & Corporate Governance Conference, 30 August 2011

We examine the effects of the short selling ban, imposed by Australian regulators in the wake of the global financial crisis, on trading of financial stocks. Unlike other developed markets, where regulators imposed short-selling restrictions for brief periods of time at the height of the financial crisis, the ban on short selling of financial stocks on the Australian Stock Exchange lasted eight months, including both the tumultuous end of 2008 and the calmer period up to May 2009.

PDF (55 pages): How the Australian Ban on Short Selling During the GFC Affected Market Quality and Volatility

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Article: Deutsche Bank charged in South Korea over stock rout

Article - Media, Publications

Deutsche Bank charged in South Korea over stock rout

BBC News, 22 August 2011

Deutsche Bank’s South Korean brokerage and four of its employees have been charged with illegally manipulating Seoul’s stock market last year.

Korean prosecutors allege the firm earned more than 45bn won ($41.5m; £25m) in unfair trading on 11 November. In a statement, Deutsche Bank denied the charges and said it would defend itself in court.

Seoul’s benchmark share index fell by 48 points, or 2.7%, in the last 10 minutes of trading on 11 November.

Korea’s Financial Services Commission confirmed that about 2.4tn won in sell orders from foreign investors were processed on that day, most of them through Deutsche Bank’s local securities unit. Continue reading “Article: Deutsche Bank charged in South Korea over stock rout”

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Article: 4 at Deutsche Bank indicted over stock manipulation

Article - Media, Publications

4 at Deutsche Bank indicted over stock manipulation

Choi He-suk, 21 August 2011

Four employees of Deutsche Bank AG and Deutsche Securities Korea have been indicted on charges of gaining unlawful profits by manipulating stock prices, the Seoul Central District Prosecutors’ Office said Sunday.

Of the four, three work at Deutsche Bank’s Hong Kong branch including one executive. The other is an executive of Deutsche Securities Korea.

The Hong Kong-based individuals have so far refused to comply with the prosecution’s summons. The prosecutors said that if they do not attend the hearing, it plans to request their extradition and to request Interpol’s cooperation if necessary. Continue reading “Article: 4 at Deutsche Bank indicted over stock manipulation”

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Article: Deutsche Bank Korea appeals freeze order over stock manipulation

Article - Media, Publications

Deutsche Bank Korea appeals freeze order over stock manipulation

TRADE FINANCE, 14 July 2011

The South Korean of Deutsche Bank AG has appealed a Seoul court’s decision to freeze its assets over allegations that the company pocketed massive profits from illegal stock market trading late November.

The bank lodged the appeal last month in response to the Seoul Central District Court’s order to freeze 44.8 billion won or $42.3 million worth of deposits jointly held by the lender and Deutsche Securities Korea, its brokerage unit, court spokesman Gong Do-il said. Continue reading “Article: Deutsche Bank Korea appeals freeze order over stock manipulation”

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Article: Overstock.com Donating All Profits from “Worldstock” to Charity

Article - Media, Publications

Overstock.com Donating All Profits from “Worldstock” to Charity

Ocean Media, 18 May 2011

Hot on the heels of Ocean Media Client Overstock.com announcing they’re beginning Carbon-Neutral Shipping, they will now begin donating 100% of all profits from their “Worldstock Fair Trade” store to charity.

The Worldstock Fair Trade Department of Overstock.com was founded in 2001, with the goal of returning 60-70% of product sale prices back to artisans from around the world who made them. As of the end of April, over $67 million have been returned. These funds have gone towards building schools as well as water towers and water harvesting tanks. Continue reading “Article: Overstock.com Donating All Profits from “Worldstock” to Charity”

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Release: Deer Consumer Products, Inc. Issues Warning Concerning Evidence of Illegal Short Selling of DEER Stock by “Alfred Little” and Others, to Seek Sanctions Against The Rosen Law Firm for Filing a Frivolous “Class Action” Complaint

Release

Deer Consumer Products, Inc. Issues Warning Concerning Evidence of Illegal Short Selling of DEER Stock by “Alfred Little” and Others, to Seek Sanctions Against The Rosen Law Firm for Filing a Frivolous “Class Action” Complaint

2 May 2011

Deer Consumer Products, Inc. (Nasdaq: DEER) (website: http://www.deerinc.com/), a leading provider of “DEER” branded consumer products to Chinese consumers and a leading vertically integrated manufacturer of small household and kitchen appliances for global customers, publicly announces today that the Company has received additional evidence of continuing illegal short selling in DEER stock.

Read full release.

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Article: CEO’s Corner: Overstock.com’s Patrick Byrne on Expansion, Sales Tax, More

Article - Media, Publications

CEO’s Corner: Overstock.com’s Patrick Byrne on Expansion, Sales Tax, More

MERCEDES CARDONA, 24 March 2011

Online retailer Overstock.com (OSTK) has been on a tear lately. Even after increasing its spending on marketing and technology, the company boosted its earnings 79% and its revenue 24% in fiscal 2010. It’s now gearing up for international expansion, recently introducing the domain name O.co as an overseas-friendly shortcut and signing a deal with DHL to reduce its international shipping costs. Continue reading “Article: CEO’s Corner: Overstock.com’s Patrick Byrne on Expansion, Sales Tax, More”