Tag: Credit Suisse

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Article: Credit Suisse Fined $1.75M for Short-Selling System Failures

Article - Media, Publications

Credit Suisse Fined $1.75M for Short-Selling System Failures

Financial Planning, 28 December 2011

Credit Suisse Securities has been fined $1.75 million by the Financial Industry Regulatory Authority for failing to properly supervise short-selling activity.

From June 1, 2006 through December 2010, Credit Suisse Securities failed to comply with the locate and marking requirements of Regulation SHO as well as FINRA rules, NASD rules and federal securities laws, according to FINRA.

Specifically, FINRA fined Credit Suisse for Reg SHO violations and for failing to properly supervise short sales and the marking of sale orders. As a result, the financial services firm entered millions of short sales without reasonable grounds to believe that the securities could be borrowed and delivered and mismarked thousands of sales orders, FINRA charges. Continue reading “Article: Credit Suisse Fined $1.75M for Short-Selling System Failures”

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Article: Credit Suisse Fined $1.75 Million for Breaking ‘Naked’ Short-Selling Rules

Article - Media, Publications

Credit Suisse Fined $1.75 Million for Breaking ‘Naked’ Short-Selling Rules

Eleazar David Meléndez, 27 December 2011

The Financial Industry Regulatory Authority (FINRA) said Monday it was fining the American brokerage unit of Swiss banking giant Credit Suisse $1.75 million for violating rules regarding the controversial market-making practice known as “naked” short-selling.

Credit Suisse Securities (USA) LLC was being fined for violating Regulation SHO, a rule enacted in early 2005 by the Securities Exchange Commission to target prevent market participants from abusing short-selling, according to a statement from the regulatory group,

In a short sale, a market maker sells a security it does not own, later borrowing the instrument from a third-party in order to make good on its transaction. If the price of that security goes down, the short-seller can later buy it back in the open market, returning it to the party from which it borrowed in the first place, and pocketing the difference in prices as profit. Continue reading “Article: Credit Suisse Fined $1.75 Million for Breaking ‘Naked’ Short-Selling Rules”

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Article: Credit Suisse Rapped for U.S. Lapses

Article - Media, Publications

Credit Suisse Rapped for U.S. Lapses

finews asia, 24 December 2011

Credit Suisse was hit with a $6.5 million fine for doing too little to prevent potential market manipulation by U.S. clients.

The Swiss bank was slammed by U.S. industry officials for and fined $6.5 million for failing to keep an eye on major U.S. institutional clients, Finra, or the Financial Industry Regulatory Authority, said in a statement. Credit Suisse said it is «pleased to have resolved these matters with FINRA and these exchanges,» according to a brokerage industry publication

Specifically, the Zurich-based lender granted clients – brokers and other institutional-sized clients – direct access to exchanges without proper oversight. Credit Suisse won more than $300 million in revenue from trading more than 300 billion securities – a move that sparked more than 50,000 alerts at Finra, which is a U.S. broker self-regulatory body. Continue reading “Article: Credit Suisse Rapped for U.S. Lapses”

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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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Testimony: Mary Schapiro’s Testimony Concerning the State of the Financial Crisis

Testimony

Testimony Concerning the State of the Financial Crisis

Mary L. Schapiro

SEC, 14 January 2010

I believe the work of the Financial Crisis Inquiry Commission (FCIC) is essential to helping policymakers and the public better understand the causes of the recent financial crisis and build a better regulatory structure. Indeed, just over seventy-five years ago, a similar Congressional committee was tasked with investigating the causes of the stock market crash of 1929. The hearings of that committee led by Ferdinand Pecora uncovered widespread fraud and abuse on Wall Street, including self-dealing and market manipulation among investment banks and their securities affiliates. The public airing of this abuse galvanized support for legislation that created the Securities and Exchange Commission in July 1934. Based on lessons learned from the Pecora investigation, Congress passed laws premised on the need to protect investors by requiring disclosure of material information and outlawing deceptive practices in the sale of securities.

PDF (29 pages): Testimony Concerning the State of the Financial Crisis

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Article: Credit Suisse Hit with $24 Billion Fraud Lawsuit

Article - Media

Credit Suisse Hit with $24 Billion Fraud Lawsuit

Toby Tobin

GoToby, 7 January 2010

January 6, 2010 – Credit Suisse Bank and real estate service firm Cushman & Wakefield defrauded developers and property owners at four luxury resorts; Ginn sur Mer (Grand Bahama Island in the Bahamas), Lake Las Vegas, Tamarack (Tamarac/Donnelly, Idaho), and Yellowstone Club (Montana), according to a lawsuit filed Sunday in the U.S. District Court for the District of Idaho. Plaintiffs, led by L.J. Gibson and Beau Blixseth seek $24 billion, including $16 billion in punitive damages.

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Article: Credit Suisse Is Accused of Defrauding Investors in 4 Resorts

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Credit Suisse Is Accused of Defrauding Investors in 4 Resorts

Jim Robbins

New York Times, 4 January 2010

Investors at four high-end resorts have filed a class-action lawsuit against Credit Suisse and the real estate services company Cushman & Wakefield, contending that they conspired to inflate the value of the properties so they could take them over.

The suit, outlined in an 84-page complaint filed Sunday in federal court in Boise, Idaho, details what it calls a sweeping loan-to-own scheme. Credit Suisse, according to the complaint, raked in huge fees on loans against the properties, which it syndicated and sold to hedge fund managers. If the resorts could not pay back the hundreds of millions of dollars in loans, based on the inflated values, Credit Suisse could either assume ownership as the agent for the creditors or sell the resorts.

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Article: $24 billion lawsuit filed against Credit Suisse

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$24 billion lawsuit filed against Credit Suisse

Rebecca Boone

The Seattle Times, 4 January 2010

Property owners at four struggling and bankrupt resorts in Idaho, Montana, Nevada and the Bahamas have filed a $24 billion federal lawsuit against Credit Suisse Group, saying the banking giant gave predatory loans to the resorts’ investors as part of a scheme to take over the properties.

Property owners at Idaho’s Tamarack Resort, the Yellowstone Club in Montana, Nevada’s Lake Las Vegas resort and the Ginn Sur Mer Resort in the Bahamas contend that Credit Suisse set up a branch in the Cayman Islands to skirt U.S. federal bank regulations and appraised the resorts at artificially inflated values as part of a plan to foreclose.

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Letter: From Dan Mathisson to SEC

Letter

From Dan Mathisson to SEC

16 June 2009

Credit Suisse welcomes the opportunity to comment on the proposed amendments to Regulation
SHO (the “Release”) of the Securities and Exchange Commission (the “Commission” or “SEC”),
which would impose “price test” restrictions on short selling in the U.S. equities markets.

PDF (18 pages): From Dan Mathisson to SEC

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Article: In Pursuit of the Naked Short by Alexis Stokes

Article - Academic

In Pursuit of the Naked Short

Alexis Stokes, Texas State University

Journal of Law and Business 5/1 (Spring 2009)

This article explores the origins of naked short-selling litigation; considers
the failures of significant naked short-selling lawsuits in federal court;
surveys the obstacles erected collectively by constitutional standing requirements, the Federal Rules of Civil Procedure, the Private Securities Litigation Reform Act, brokerage firms, death spiral financiers, and the Depository Trust and Clearing Corporation; examines the efficacy of Regulation SHO, SEC rule 10b-21, and new FINRA rules; discusses recent state legislation and state court litigation; and identifies non-litigation options to curb naked short-selling. Ultimately, this article seeks to answer the question: If manipulative naked short-selling is more than a mythological scapegoat for
small cap failure, what remedies are, or should be, available?

PDF (62 Pages): Article In Pursuit of the Naked Short

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Article: Did It Help to Curb Short Sales?

Article - Media

Did It Help to Curb Short Sales?

Floyd Norris

The New York Times, 12 August 2008

A rule that made it harder to short some financial stocks and that may have helped raise prices and reduce the volume of shorting in those stocks expired Tuesday, as the Securities and Exchange Commission considers whether to tighten the rules on all short selling.

It may be a coincidence, but the announcement of the rule on July 15 coincided with the bottom of the bear market for financial stocks, which leaped that day and are now well above where they were. And the final day proved to be a very bad day for those shares.

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Article: Lawsuit Filed Against Major Financial Institutions Alleging a Conspiracy to Engage in Illegal Naked Short Selling of TASER International Inc. and to Create, Loan and Sell Counterfeit Shares of TASER Stock

Article - Media

Lawsuit Filed Against Major Financial Institutions Alleging a Conspiracy to Engage in Illegal Naked Short Selling of TASER International Inc. and to Create, Loan and Sell Counterfeit Shares of TASER Stock

MarketWatch cited by RGB Communications via Wayback, May 28, 2008

Today the legal consortium of The O’Quinn Law Firm and Christian Smith & Jewell, both of Houston, Texas and Bondurant, Mixson & Elmore, LLP of Atlanta, Georgia filed a Complaint in the State Court of Fulton County, Georgia on behalf of certain shareholders of TASER International Inc. (“TASER”) against eight of the largest Wall Street firms, including Bank of America Securities LLC, Bear Stearns Securities Corp., Credit Suisse USA Inc., Deutsche Bank Securities, Inc., Goldman Sachs Group, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Morgan Stanley & Co. Inc., UBS Securities LLC.

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Article: The ‘Phantom Shares’ Menace

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The ‘Phantom Shares’ Menace

John W. Welborn

Securities & Exchange,  24 April 2008

In 1985, the National Association of Securities Dealers (nasd) commissioned Irving M. Pollack, a securities law expert and former Securities and Exchange commissioner, to conduct a comprehensive review of short selling in nasdaq securities. The nasd sought to determine what, if any, additional short selling regulation was needed for the nasdaq market. The result was the now-famous “Pollack Study,” which described the short selling landscape of the day and made important recommendations regarding the disclosure, reporting, and settlement of short sales.

PDF (10 pages): The ‘Phantom Shares’ Menace

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Article: Refco – When Smart Money Isn’t So Smart

Article - Media

Refco: When Smart Money Isn’t So Smart

Matthew Goldstein

Bloomberg, 16 July 2007

The titans of the private equity world fancy themselves smarter, shrewder, and more sophisticated than any one else on Wall Street. Investors have bought into the sentiment as they’ve scooped up the shares of the private equity firms that have gone public recently: Blackstone Group (BX) and Fortress Investment Group (FIG). But a recent report on the spectacular collapse of Refco—the once-dominant commodities broker that was laid waste by a massive accounting fraud—paints an unflattering portrait of the private equity firm that engineered Refco’s August, 2004, leveraged buyout and its initial public offering a year later (see BusinessWeek.com, 7/11/07, “Kill the Private-Equity Tax Break”).

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