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Article: Merrill Lynch fined $25 million for multi-year spoofing scheme

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Merrill Lynch fined $25 million for multi-year spoofing scheme

Hayley McDowell, 26 June 2019

Merrill Lynch has been fined $25 million by authorities in the US after admitting it engaged in a multi-year spoofing scheme in the precious metals futures market.

The global commodities trading arm of Merrill Lynch agreed to pay the fine to resolve the US Department of Justice’s investigation into the scheme which saw the firm’s metals traders deceive market participants by placing fraudulent orders for futures contracts.

Merrill Lynch Commodities admitted that from at least 2008 until 2014, its precious metals traders placed orders for futures with intentions to cancel before execution, in a bid to create a false impression of increased supply and demand and manipulate the market. Continue reading “Article: Merrill Lynch fined $25 million for multi-year spoofing scheme”

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Article: U.S. Fines Merrill Lynch For ‘spoofing’ In Precious Metals Futures

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U.S. Fines Merrill Lynch For ‘spoofing’ In Precious Metals Futures

RTTNews, 25 June 2019

Merrill Lynch’s global commodities trading business agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by the company’s precious metals traders to mislead the market for precious metals futures contracts traded on the Commodity Exchange Inc., the U.S. Justice Department said.

Merrill Lynch admitted that, starting at least 2008 and continuing through 2014, precious metals traders employed by the company’s schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market. They did so by placing fraudulent orders for precious metals futures contracts that, at the time the traders placed the orders, they intended to cancel before execution. Continue reading “Article: U.S. Fines Merrill Lynch For ‘spoofing’ In Precious Metals Futures”

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Article: Merrill Lynch Commodities Inc. Enters into Corporate Resolution and Agrees to Pay $25 Million in Connection with Deceptive Trading Practices Executed on U.S. Commodities Markets

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Merrill Lynch Commodities Inc. Enters into Corporate Resolution and Agrees to Pay $25 Million in Connection with Deceptive Trading Practices Executed on U.S. Commodities Markets

Department of Justice Office of Public Affairs, 25 June 2019

Merrill Lynch Commodities Inc. (MLCI), a global commodities trading business, has agreed to pay $25 million to resolve the government’s investigation into a multi-year scheme by MLCI precious metals traders to mislead the market for precious metals futures contracts traded on the Commodity Exchange Inc. (COMEX), announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. Continue reading “Article: Merrill Lynch Commodities Inc. Enters into Corporate Resolution and Agrees to Pay $25 Million in Connection with Deceptive Trading Practices Executed on U.S. Commodities Markets”

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Article: Merrill Lynch fined by DOJ, CFTC for ‘spoofing’ in precious metals futures

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Merrill Lynch fined by DOJ, CFTC for ‘spoofing’ in precious metals futures

Francine McKenna, 25 June 2019

Merrill Lynch’s global commodities trading business agreed to pay $25 million and enter into a non-prosecution agreement with the Department of Justice on Tuesday to settle charges regarding a multi-year scheme by its precious metals traders to mislead the market for precious metals futures contracts traded on the Commodity Exchange Inc. Merrill Lynch admitted to the allegations that beginning by at least 2008 and continuing through 2014, its precious metals traders schemed to deceive other market participants by injecting materially false and misleading information into the precious metals futures market by placing fraudulent “spoof” orders for precious metals futures contracts that, at the time the traders placed thousands of fraudulent orders, they intended to cancel before execution. Continue reading “Article: Merrill Lynch fined by DOJ, CFTC for ‘spoofing’ in precious metals futures”

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Article: CFTC Orders Merrill Lynch Commodities, Inc. to Pay Approximately $25 Million for Spoofing, Manipulation, and Attempted Manipulation in Precious Metals Futures

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CFTC Orders Merrill Lynch Commodities, Inc. to Pay Approximately $25 Million for Spoofing, Manipulation, and Attempted Manipulation in Precious Metals Futures

CFTC , 25 June 2019

The Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Merrill Lynch Commodities, Inc. (MLCI), a provisionally registered swap dealer, for spoofing, manipulation, and attempted manipulation over a six-year period with respect to certain precious metals futures contracts traded on the Commodity Exchange, Inc. (COMEX).

The CFTC Order imposes monetary sanctions totaling approximately $25 million, which includes a civil monetary penalty of $11.5 million dollars, over $2.3 million in restitution, and disgorgement of $11.1 million. The Order also requires MLCI to cooperate with the CFTC in matters related to this action and the underlying conduct, and to comply with certain obligations in connection with its corporate compliance program and reporting requirements. Continue reading “Article: CFTC Orders Merrill Lynch Commodities, Inc. to Pay Approximately $25 Million for Spoofing, Manipulation, and Attempted Manipulation in Precious Metals Futures”

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Article: EU Regulators Charge Credit Suisse with Rigging FX Markets

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EU Regulators Charge Credit Suisse with Rigging FX Markets

Celeste Skinner, 01 August 2018

Credit Suisse Group AG announced on Tuesday that it has been charged by European Union antitrust regulators with manipulating forex rates. The charges signal the five-year-long investigation might be coming to a close in the near future.

In a regulatory filing, the allegations state that Credit Suisse “engaged in anti-competitive practices in connection with its foreign exchange trading business.” Now, the Wall Street bank will need to wait and see if the EU regulators will impose a fine, which could be up to 10% of its global turnover. Continue reading “Article: EU Regulators Charge Credit Suisse with Rigging FX Markets”

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Article: Supreme Court Decides Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning

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Supreme Court Decides Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning

Chuck Webber, Jeffrey P. Justman, James G. Martignon, 05 May 2016

On May 16, 2016, the Supreme Court of the United States decided Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, No. 14-1132, holding that that the “arising under” test for federal-question jurisdiction under 28 U.S.C. § 1331 determines whether federal courts have exclusive jurisdiction under section 27 of the Securities Exchange Act of 1934 (the “Exchange Act”) of lawsuits to enforce liabilities or duties created by that Act. (The Court did not address the portion of section 27 that gives federal courts exclusive jurisdiction of “violations of this chapter or the rules and regulations thereunder” with respect to criminal and regulatory enforcement actions.)

Greg Manning owned stock in Escala Group, Inc., a company traded on the NASDAQ. Between 2006 and 2007, Escala’s share price plummeted and Manning lost most of his investment. Manning blamed Merrill Lynch and other financial institutions for devaluing Escala during that period through “naked short sales” of its stock, under which one borrows stock from a broker and sells it to a buyer on the open market, but never delivers the shares back to the buyer. “Naked” short sales of stock may be designed to drive down a company’s stock price, and are accordingly regulated by Regulation SHO. Continue reading “Article: Supreme Court Decides Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning”

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Article: SCOTUS Send Merrill Lynch Case to NJ State

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SCOTUS Send Merrill Lynch Case to NJ State

ADAM KLASFELD, 06 May 2016

Merrill Lynch and other brokerage firms must face a state court case that says illegal naked short sales cost investors more than $800 million, the U.S. Supreme Court ruled Monday. The shareholders brought their case four years ago in New Jersey over the Fortune 500 memorabilia company Spectrum Group International, then known as Escala Group. One of the investors, Greg Manning, said “naked short selling” sent his more than 2 million Escala shares into a nosedive. In typical short sales, investors speculate that the price of a stock will decline and purchase securities that they do not currently own in order to profit from the fall. Securities laws and regulations mandate that a short seller borrow the stock it sold and deliver it within four days of sale. Continue reading “Article: SCOTUS Send Merrill Lynch Case to NJ State”

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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: SEC charges Merrill Lynch, fines firm $11 million for short sales violations

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SEC charges Merrill Lynch, fines firm $11 million for short sales violations

Francine McKenna, 01 June 2015

The Securities and Exchange Commission announced charges Monday against Bank of America’s BAC, +1.88% Merrill Lynch subsidiary for using bad data since 2012 to “locate” stock for short sales, violating Rule 203(b) of Regulation SHO. That rule prevents “naked” short sales, shorting shares that are not “easy to borrow.” The firm admitted the wrongdoing and will pay a $9 million penalty plus interest and give up $1.6 million in profits. Merrill Lynch must also submit to a compliance review by an independent consultant. Continue reading “Article: SEC charges Merrill Lynch, fines firm $11 million for short sales violations”

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Article: Four Banks Plead Guilty To Foreign Exchange Collusion, UBS Pleads Guilty To Wire Fraud

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Four Banks Plead Guilty To Foreign Exchange Collusion, UBS Pleads Guilty To Wire Fraud

Antoine Gara, 20 May 2015

U.S. banking giants Citigroup and JPMorgan Chase and U.K.-base conglomerates Barclays and The Royal Bank of Scotland have agreed to plead guilty antitrust violations stemming from their collusion to manipulate prices in the foreign exchange market over the course of five years, the Department of Justice said on Wednesday. Those banks and UBS have agreed to pay a total of $5.8 billion in fines to global regulators as part of their FX market collusion.

Five banks will pay the Department of Justice nearly $3 billion in fines and penalties for their manipulation of U.S. dollar and Euro exchange rates, which the DoJ characterized as occurring “almost every day for five years” through private chat rooms, benefiting their trading positions but harming countless consumers and investors around the world. Separately, the Federal Reserve said on Wednesday, six banks would pay a total of $1.8 billion in fines for “unsafe and unsound practices” in the FX market. Continue reading “Article: Four Banks Plead Guilty To Foreign Exchange Collusion, UBS Pleads Guilty To Wire Fraud”

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Article: 5 big banks pay $5.4 billion for rigging currencies

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5 big banks pay $5.4 billion for rigging currencies

Virginia Harrison and Mark Thompson, 20 May 2015

Citigroup (C), Barclays (BCS), JP Morgan Chase (JPM), and Royal Bank of Scotland (RBSPF)were fined more than $2.5 billion by the U.S. after pleading guilty to conspiring to manipulate the price of dollars and euros. The four banks, plus UBS (UBS) , have also been fined $1.6 billion by the Federal Reserve, and Barclays will pay regulators another $1.3 billion to settle related claims.

The first four banks operated what they described as “The Cartel” from as early as 2007, using online chatrooms and coded language to influence the twice-daily setting of benchmarks in an effort to increase their profits. The guilty banks “participated in a brazen display of collusion and foreign exchange rate market manipulation,” said U.S. Attorney General Loretta Lynch. Continue reading “Article: 5 big banks pay $5.4 billion for rigging currencies”

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Article: Deutsche Bank hit by record $2.5bn Libor-rigging fine

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Deutsche Bank hit by record $2.5bn Libor-rigging fine

Jill Treanor, 23 April 2015

Germany’s Deutsche Bank has been fined a record $2.5bn (£1.7bn) for rigging Libor, ordered to fire seven employees and accused of being obstructive towards regulators in their investigations into the global manipulation of the benchmark rate.

The penalties on Germany’s largest bank also involve a guilty plea to the Department of Justice (DoJ) in the US and a deferred prosecution agreement. The regulators released a cache of emails, electronic messages and phone calls showing the attempts to move the rate used to price £3.5tn of financial contracts. Continue reading “Article: Deutsche Bank hit by record $2.5bn Libor-rigging fine”

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Article: FINRA Fines Merrill Lynch $6 Mln for Failing to Prevent Naked Short Selling

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FINRA Fines Merrill Lynch $6 Mln for Failing to Prevent Naked Short Selling

Victor Golovtchenk, 28 October 2014

According to an announcement by the U.S. Financial Industry Regulatory Authority (FINRA), U.S. bank Merrill Lynch’s Professional Clearing Corp. (Merrill Lynch PRO) got fined $3.5 million for violating Regulation SHO. The Securities and Exchange Commission (SEC) implemented this rule in 2005 to prevent the conducting of a practice called naked short selling.

Merrill Lynch’s affiliated broker-dealer Pierce, Fenner & Smith Incorporated (Merrill Lynch) has also been fined $2.5 million for failing to establish, maintain and enforce supervisory systems and procedures related to Regulation SHO and other areas, according to the FINRA announcement. Continue reading “Article: FINRA Fines Merrill Lynch $6 Mln for Failing to Prevent Naked Short Selling”

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Article: Florida state professors settle naked short-selling case

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Florida state professors settle naked short-selling case

Sarah N. Lynch, 01 February 2014

WASHINGTON (Reuters) – Two Florida State University professors who specialize in financial markets and physics will pay more than $670,000 to settle civil charges that they carried out an illegal short-selling scheme using an elaborate options strategy, U.S. regulators said on Friday.

Gonul Colak and Milen Kostov settled with the Securities and Exchange Commission without admitting or denying the charges. Continue reading “Article: Florida state professors settle naked short-selling case”

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