Foreign Collusion, Naked Shorting (Counterfeiting) & Money Laundering — All Illicit Wealth
Overstock attempts to uncover malicious naked shorts
Keith Hahn
Dealbreaker, 25 April 2007
Patrick Byrne, the CEO of Overstock.com, is seeking $3.5bn in damages from 10 prime brokers for intentionally manipulating Overstock’s share price through naked shorting. The big names charged are Bear Stearns, Citigroup, Credit Suisse, Goldman Sachs, Merrill Lynch, and Morgan Stanley.
Naked Short Victim Strikes Back
Liz Moyer
Forbes, 2 February 2007
Overstock.com filed a $3.5 billion lawsuit in California state court Friday accusing 10 of the largest U.S. securities firms of participating in a “massive, illegal stock market manipulation scheme” to distort its stock.
Whisleblower Vindicated: Massive Trading Firm Knight Capital Charged With Abusing “Naked Shorts”
David Dayen
The Intercept, 15 December 2016
Back in September, I wrote a seven-part series at The Intercept chronicling how former Wall Street trader Chris DiIorio, determined to figure out how he lost a small fortune on a penny stock, came to the conclusion that gigantic market-making firm Knight Capital, now known as KCG, repeatedly violated federal regulations meant to prevent abuse in what are known as “naked short sales.”
Naked Short Selling: How Exposed are Investors?
James W. Christian, Robert Shapiro, John-Paul Whalen
The Houston Law Review, 10 November 2006
Regulation SHO is a start, but in order to guarantee a fair market place, the SEC must close the loopholes in Regulation SHO and institute comprehensive reforms to the clearing and settlement system. Until the SEC makes these necessary reforms and addresses the DTCC’s mismanagement of the Stock Borrow Program, investors will continue to be exposed to the manipulative potential of naked short selling.
PDF (58 Pages): HLR Naked Short Selling 2006-11-10
S.E.C. Inquiry on Hedge Fund Draws Scrutiny
Walt Bogdanich, Gretchen Morgenson
New York Times, 22 October 2006
By the evening of June 20, 2005, the government’s investigation of possible insider trading by Pequot Capital Management, a prominent hedge fund, had reached a critical stage.
Throughout the day, Robert Hanson, a branch chief in the Washington office of the Securities and Exchange Commission, had been questioning his lead investigator in the case about taking the testimony of John J. Mack, an influential Wall Street executive.
Liz Moyer
Forbes, 13 September 2006
The U.S. Securities and Exchange Commission has received a deluge of requests to amend short-selling rules it enacted just two years ago as the New York Stock Exchange continues its efforts to enforce existing regulations.
JPMorgan Chase has become the fifth bank to be censured and fined by the NYSE’s regulatory division for violations of trading rules meant to curb abusive short-selling.
Liz Moyer
Forbes, 25 August 2006
Suspicious trading last year in shares of Global Links, a small Nevada real estate holding company, was far more intense than previously thought.
Data released to Patch earlier this month had shown trade fails of 10 million shares starting in mid-April, a time when 4 million shares of Global Links were issued and outstanding.
Liz Moyer
Forbes cited by RGM Communications via Wayback, 28 July 2006
Toronto-based Fairfax Financial Holdings filed a $5 billion lawsuit against SAC Capital, Rocker Partners and a number of other hedge funds, claiming they manipulated the insurance company’s stock, shearing its market cap by one-third.
Earlier this week, the regulatory arm of NYSE Group, fined Daiwa Securities America, Goldman Sachs Execution & Clearing, Credit Suisse Securities, and Citigroup Global Markets $1.25 million for violations of Regulation SHO–a rule put in place in January 2005 to clamp down on abuses–related to how they handle and monitor short-sale transactions by hedge funds and other clients.
Lawsuits Accuse “Prime Brokers” of Securities Fraud
Wayne Jett
San Gabriel Valley Tribune cited by RGM Communications via Wayback, 19 July 2006
Two class-action lawsuits filed in Manhattan federal court in April allege fraud by the world’s largest “prime brokers” in securities lending practices.
Goldman Sachs, Bear Stearns, Lehman Brothers, Morgan Stanley, Merrill Lynch, Citigroup, Banc of America Securities, Credit Suisse, Deutsche Bank Securities, UBS Financial and Bank of New York allegedly charge high fees to lend securities for short selling, but fail to deliver the securities sold short by hedge funds.
Suit Against Prime Brokers for Phony Stock Borrow Charges Filed
Bud Burrell, Chad Bray
Dow Jones Newswires cited by Sanity Check via Wayback, 12 April 2006
An antitrust lawsuit was filed Wednesday against the securities industry’s largest brokerage firms over fees charged as a result of “naked short selling.”
The lawsuit filed in federal court in Manhattan by Electronic Trading Group LLC alleges that the major broker-dealers charged unearned fees, commissions or interest on short sales where those broker-dealers failed to borrow or deliver the stock to back a short position.
Steven Syre
The Boston Globe cited by RGM Communications via Wayback, 31 January 2006
American Business Financial Services Inc. was a big business with serious problems long before it ended up on the bankruptcy liquidation scrap heap. The company’s line on its own slow-motion demise relied heavily on stock market conspiracy theories.
The Philadelphia subprime lender has filed several lawsuits claiming illegal market manipulation by investors trying to profit on the company’s woes. The latest version was filed last month in federal court in Delaware by its bankruptcy trustee against Boston Partners Asset Management.
DTCC Chief Spokesperson Denies Existence of Lawsuit
Financial Wire cited by RGM Communications via Wayback, 11 May 2004
FinancialWire received a confidential email between a reporter and Stuart Z. Goldstein, Managing Director of Corporate Communications for the Depository Trust and Clearing Corp. in which Goldstein was represented as denying that a lawsuit filed by Nanopierce Technologies (OTCBB: NPCT) exists.
The chief spokesperson for the DTCC, whose board of directors represent a who’s who of financial entities, including Lehman Brothers (NYSE: LEH), Citigroup / Solomon Smith Barney’s Corporate Investment Bank (NYSE: C), and Morgan Stanley (NYSE: MWD), was quoted as stating that the “lawsuit” did not exist and was simply “charges being leveled by internet crackpots.”
SEC’s IPO probe expands to include Morgan Stanley
Investment Executive, 26 February 2003
“The Securities and Exchange Commission, expanding a probe into alleged IPO abuses, has signaled to Morgan Stanley that it may file civil charges alleging the securities firm doled out shares to investors based partly on their commitments to buy additional stock after trading began, people familiar with the matter say,” writes Randall Smith in today’s Wall Street Journal.
“The SEC staff has informally indicated to Morgan Stanley that it plans to send a so-called Wells notice notifying the firm of the planned charges, the people said. The development suggests the SEC’s investigation into such “laddering” of stock sold in initial public offerings could be heating up. The probe is one of the last major regulatory crackdowns on Wall Street excesses that characterized the 1990s stock-market bubble.”
India Market Regulator Suspects Credit Suisse Unit of Manipulation
Daniel Pearl, 20 April 2001
India’s stock market regulation authority ordered three brokerage groups, including Credit Suisse Group ‘s Credit Suisse First Boston unit, to freeze brokerage activities until further notice, saying they were involved in recent manipulation of share prices.
The actions, by the Securities and Exchange Board of India, marked the toughest discipline yet meted out to a foreign brokerage firm in India. Besides CSFB, the regulator handed similar notices to Indian companies, five of them associated with Nirmal Bang Group and three associated with First Global Securities.
The Securities and Exchange Board, known as SEBI, gave the companies the opportunity to contest the freeze order, but not before the end of this month, people familiar with the matter said. SEBI officials said they were acting to protect investor interests but declined to make public letters SEBI sent to the companies and to Indian stock exchanges. Continue reading “Article: India Market Regulator Suspects Credit Suisse Unit of Manipulation”
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