Victim: Greg Manning

Victim - Individual

Greg Manning  owns one of the world’s most important auction houses for stamps, Greg Manning Auctions, Inc. (GMAI), is also a major auctioneer of coins, sports cards, movie posters, comic books, and other specialty collectibles. Greg Manning does business across the price spectrum but focuses on high-end specialty markets where its expertise and customer service can serve to differentiate the company from the competition. The company has a strong presence in Europe and Asia through joint ventures in Spain and China.

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Article: SCOTUS Rules That Lawsuit Alleging Naked Short Selling Can Proceed in State Court

Article - Media

SCOTUS Rules That Lawsuit Alleging Naked Short Selling Can Proceed in State Court

18 May 2016

In a unanimous decision that may lead to an increase in the trend of state court suits involving securities litigation, the US Supreme Court ruled this week that an action related to the short sale of securities could proceed in state court. In Merrill Lynch, Pierce, Fenner & Smith Inc. v. Manning, the Court held that the exclusive jurisdiction of securities claims in federal court provided by the Securities Exchange Act is limited to claims “arising under” the Exchange Act.

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

Article - Media, Publications

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”

Article: SCOTUS Send Merrill Lynch Case to NJ State

Article - Media, Publications

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”

Article: Naked Shorts at the Supreme Court

Article - Media

Naked Shorts at the Supreme Court

Noah Feldman

Bloomberg, 1 December 2015

When you’re trading securities, you generally think about being regulated by the Securities and Exchange Commission and federal law. Should you be worried about state law, too? That question isn’t merely theoretical, as shown by the naked short selling case that was argued Tuesday before the U.S. Supreme Court. The answer has practical consequences for traders of all kinds.

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Article: Supreme Court to Decide if “Naked” Short Selling State Law Claim May Be Resolved in State Court

Article - Media, Publications

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”

Article: Supreme Court to Hear Appeal of Third Circuit ‘Naked’ Short Selling Securities Suit

Article - Media

Supreme Court to Hear Appeal of Third Circuit ‘Naked’ Short Selling Securities Suit

Timothy Raub

LexisNexis, 30 June 2015

The U.S. Supreme Court today agreed to hear an appeal of a Third Circuit U.S. Court of Appeals ruling remanding a securities class action lawsuit over the alleged illegal “naked” short selling of a company’s stock back to state court Merrill Lynch, Pierce, Fenner & Smith Inc., et al. v. Greg Manning, et al., No. 14-1132, U.S. Sup.

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