Meme stocks loom large in the CSA’s short-selling review
James Langton, 22 March 2021
When a group of retail traders used Reddit to gleefully gang up on a handful of hedge funds in January, giving birth to the concept of “meme” stocks, they cranked up an already simmering debate about proper public discourse related to trading. In Canada, a consultation regarding activist short-sellers is the focus of that debate.
Late last year, the Canadian Securities Administrators (CSA) published a consultation paper on the role and regulation of activist short-sellers — traders who publicly air their negative views on the stocks they’re shorting.
Defenders of the practice maintain that vocal short-sellers are the only thing standing between unrelenting upside hype and ordinary investors — i.e., their skepticism and scrutiny help expose corporate fraud and misconduct, aiding naive regulators and investors alike. Continue reading “Article: Meme stocks loom large in the CSA’s short-selling review”
JP Morgan settles massive market manipulation case
James Langton, 29 September 2020
Wall street giant JPMorgan Chase & Co. is paying US$920 million to resolve allegations that it engaged in manipulative trading in the U.S. Treasuries market and precious metals futures markets.
The firm entered a deferred prosecution agreement with the U.S. Department of Justice to resolve wire fraud charges stemming from alleged illegal trading in precious metals futures, U.S. Treasury futures, and in the cash market for U.S. Treasury notes and bonds.
Under the agreement, JPMorgan will pay over US$920 million, including a criminal monetary penalty, disgorgement and victim compensation.
According to the justice department, between March 2008 and August 2016, numerous traders on JPMorgan’s precious metals desks in New York, London and Singapore placed spoofing orders for precious metals futures.
A couple of those traders have pleaded guilty to criminal charges and several others are still facing charges.
Traders on the firm’s U.S. Treasuries desks in New York and London also engaged in spoofing in U.S. Treasuries markets.
Portions of the criminal penalty and disgorgement are to be credited against payments to be made to the U.S. Commodity Futures Trading Commission and the U.S. Securities Exchange Commission under separate agreements with the regulators.
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U.S. broker sanctioned for failing to guard against market manipulation
James Langton, 23 December 2019
Credit Suisse Securities (USA) LLC has been sanctioned by the U.S. Financial Industry Regulatory Authority (FINRA) and a trio of U.S. exchanges for supervisory violations that allowed possible market manipulation.
The firm has been fined a combined US$6.5 million for a variety of violations that stemmed from providing direct market access that allowed certain clients to engage in potentially manipulative trading activity, including spoofing, layering and wash trading. Continue reading “Article: U.S. broker sanctioned for failing to guard against market manipulation”
SEC moves to close loopholes in short-selling rule
Investment Executive, 14 June 2007
The U.S. Securities and Exchange Commission has voted to take additional steps that it believes will close loopholes in its short-selling rule, Regulation SHO, further reducing persistent failures to deliver stock within the standard settlement period.
The SEC voted to adopt final amendments to its rules that, it says, will further reduce fails to deliver in certain equity securities. Regulation SHO, which became fully effective in January 2005, provides a regulatory framework governing short sales of securities.
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NYSE fines five firms for rule violations
Investment Executive, 13 September 2006
NYSE Regulation announced that it has disciplined five firms for a variety of rule violations.
J.P. Morgan Securities Inc. was disciplined for violation of SEC rules on short sales, NYSE order rules and supervisory violations. It consented without admitting or denying guilt to findings of operational deficiencies concerning Regulation SHO, violating NYSE order rules, and books and records and supervisory violations.
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