Tag: Merrill Lynch

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Article: Overstock and Merrill Lynch settle for $20 million

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Overstock and Merrill Lynch settle for $20 million

Mark Dugdale

Securities Lending Times, 3 February 2016

Overstock.com has ended its long legal battle with a group of broker-dealers after securing a $20 million settlement from the remaining defendant.
Merrill Lynch Professional Clearing Corporation was the last defendant standing in the litigation over allegations of naked short selling, which were first brought in 2007. Merrill Lynch agreed to pay $20 million to Overstock and co-plaintiffs on 28 January to settle the claims, without admitting any liability.

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Article: It looks like traders might have manipulated another huge market

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It looks like traders might have manipulated another huge market

Portia Crowe

Business Insider, Portia Crowe

A handful of London traders may have rigged the UK-government bond market, according to reports from Global Capital and The Wall Street Journal.
Global Capital reports that regulators have contacted Bank of America Merrill Lynch, Credit Agricole, Credit Suisse, and Nomura in relation to a possible investigation into manipulation in the British-government bond market.

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Article: How Martin Shkreli Allegedly Created a ‘Ponzi Scheme’ With Biotech Stocks

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How Martin Shkreli Allegedly Created a ‘Ponzi Scheme’ With Biotech Stocks

Jen Wieczner

Fortune, 17 December 2015

After racking up losses while running hedge fund firm MSMB Capital Management, which made bets against biotech stocks, Shkreli formed a biotech company of his own called Retrophin (RTRX) in 2011. He effectively used the company as his own personal piggybank to pay back his and the MSMB funds’ debts, according to the charges brought by the FBI and a separate SEC complaint.

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Article: Naked Shorts at the Supreme Court

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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: Boston pension fund accuses big banks of manipulating U.S. securities

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Boston pension fund accuses big banks of manipulating U.S. securities

Greg Ryan

Boston Business Journal, 24 July 2015

The city of Boston’s pension fund has sued more than 20 of the world’s largest financial companies, claiming they conspired to alter the prices of U.S. Treasury securities they sold to the fund and other investors across the country.

The lawsuit, which was filed in New York federal court on Thursday, targets Merrill Lynch, Goldman Sachs, Morgan Stanley, and Citigroup Global Markets, among other dealers of the securities.

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

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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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Article: High Court To Hear Merrill Lynch Naked Short Selling Suit

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High Court To Hear Merrill Lynch Naked Short Selling Suit

Law360, 30 June 2015

In a short order, the high court granted the banks’ petition for a writ of certiorari, which was filed over a Third Circuit decision to remand the shareholder suit to state court. The justices also granted the Securities Industry and Financial Markets Association leave to file an amicus brief in the matter.

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Article: Merrill Lynch Fined for Supervisory Failures Leading to Ponzo Scheme

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Merrill Lynch Fined for Supervisory Failures Leading to Ponzo Scheme

Nicholas Guiliano

Securities Arbitration Attorneys, 20 June 2015

Bank of America subsidiary Merrill Lynch, Pierce, Fenner & Smith Inc. has been fined $1 million by the Financial Industry Regulatory Authority, or FINRA, for failure to supervise one of its stockbrokers at its branch office in San Antonio, Texas. FINRA announced the fine on Oct. 4.

Bruce Edward Hammonds, a registered representative with the firm, used a Merrill Lynch account to operate a Ponzi scheme, luring 11 people to invest more than $1 million in B&J Partnership, an entity he ran for over 10 months, according to information released by FINRA. Hammonds request to open a business account for B&J was approved by Merrill Lynch supervisors, who subsequently failed to monitor the funds that the investors deposited and Hammonds withdrew. He was fired by Merrill Lynch in June 2008.

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Article: Illegal Naked Short Selling Appears to Lie at the Heart of an Extensive Stock Manipulation Scheme

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Illegal Naked Short Selling Appears to Lie at the Heart of an Extensive Stock Manipulation Scheme

Larry Smith

SmithOnStocks, 16 June 2015

Only a motivated enforcement agency with subpoena power and an accompanying powerful enforcement infrastructure can prove that naked shorting is at the heart of an extensive stock manipulation scheme. However, I believe that the observational evidence is overwhelming that naked shorting practices are widely used to manipulate the stock prices of emerging biotechnology companies as well as many other small and large companies. Unfortunately, naked shorting is an investment variable that investors must understand if they are going to make investments in the emerging biotechnology space in particular and the equity markets in general.

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Release: Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement

Release

Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement

SEC, 1 June 2015

The Securities and Exchange Commission today charged two Merrill Lynch entities with using inaccurate data in the course of executing short sale orders. Merrill Lynch agreed to admit wrongdoing, pay nearly $11 million, and retain an independent compliance consultant in order to settle the charges.

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Article: BofA’s Merrill fined $11m over short selling

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BofA’s Merrill fined $11m over short selling

Ben McLannahan

Financial Times, 1 June 2015

The Securities and Exchange Commission has fined Bank of America’s Merrill Lynch unit $11m for failing to keep proper records of stock available to borrow, after irregular trades were carried out over at least six years.

The case relates to short selling — or betting that the price of a stock will fall — in which investors such as hedge funds ask their brokers to find stock to borrow, which they then sell, hoping to buy it back later for less.

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Article: Merrill Lynch Fined by FINRA

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

Francine McKenna

MarketWatch, 1 June 2015

The Securities and Exchange Commission announced charges Monday against Bank of America’s 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.

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Filing: SEC v Merrill Lynch

Filing

SEC v Merrill Lynch

1 June 2015

These proceedings concern Merrill’s violations of Regulation SHO (Reg SHO”) of the Exchange Act, in connection with its practices relating to its execution of short sales. As described more fully below, the violations arose from two separate issues concerning Merrill’s use of its “easy to borrow” lists.

PDF (11 pages): SEC v Merrill Lynch

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Article: Financial Conduct Authority Fines Merrill Lynch International $20 Million

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Financial Conduct Authority Fines Merrill Lynch International $20 Million

Corporate Crime Reporter, 22 April 2015

The Financial Conduct Authority (FCA) has fined Merrill Lynch International $20 million for incorrectly reporting 35,034,810 transactions and failing to report another 121,387 transactions between November 2007 and November 2014.

The size of the fine – the highest imposed for transaction reporting failures to date – reflects the severity of Merrill Lynch’s misconduct, failure to adequately address the root causes over several years despite substantial FCA guidance to the industry and a poor history of transaction reporting compliance, consisting of a private warning issued in 2002 and a fine of $225,000 in 2006.

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Article: Merrill Lynch Fined $7.2M Over Options Reporting Flubs

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Merrill Lynch Fined $7.2M Over Options Reporting Flubs

Law360, 2 January 2015

Merrill Lynch Pierce Fenner & Smith Inc. will pay $5.8 million in fines, while Merrill Lynch Professional Clearing Corp. agreed to pay $1.45 million to settle the joint enforcement action by FINRA, BOX Options Exchange LLC and Nasdaq’s options markets in Philadelphia and Boston, according to a settlement document dated Dec. 22, 2014.

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