Posts tagged 'SEC'

Idris Dayo Mustapha — a creative alleged stock scamster, if nothing else…

We’ll let the SEC do the talking here, since the news is box fresh and the full name of a UK-based individual called “Idris Dayo Mustapha” doesn’t seem to have an internet history. He’s supposedly been hacking into the accounts of US investors, placing price-moving trades and then profiting via his own trading account. Which is sneaky and advanced hacking.

The SEC statement:

Washington D.C., June 22, 2016 — The Securities and Exchange Commission today announced it has obtained an emergency court order to freeze the assets of a United Kingdom resident charged with intruding into the online brokerage accounts of U.S. investors to make unauthorized stock trades that allowed him to profit on trades in his own account.

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Sarao ruling… (he’s lost, but can appeal)

Click to read…

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Here’s the latest example of regulators introducing rules to ‘protect’ retail investors by keeping said investors in the dark

From the SEC, via FINRA, late last month…

Rule 2242 is intended to foster objectivity and transparency in debt research and to provide investors with more reliable and useful information to make investment decisions. The rule adopts a tiered approach that, in general, provides retail debt research recipients with extensive protections similar to those provided to recipients of equity research under FINRA rules, with modifications to reflect differences in the trading of debt securities.2 At the same time, the rule provides broad exemptions for debt research distributed solely to eligible institutional investors.

And from Barclays, on Thursday… Read more

Stevie Cohen, neutered (again)

The SEC just will not lay off this particular hedgie…

Washington D.C., Jan. 8, 2016 — The Securities and Exchange Commission today announced that hedge fund manager Steven A. Cohen will be prohibited from supervising funds that manage outside money until 2018 in order to settle charges for failing to supervise a former portfolio manager who engaged in insider trading while employed at his firm. In addition, Cohen’s family office firms will be subject to SEC examinations and the firms must retain an independent consultant to conduct periodic reviews of their activities to ensure compliance with securities laws. Read more

Fragile, gameable markets and a psychotic SEC

As Bloomberg Screamed On Friday…

Scottish Man Faces 25 Years in U.S. Jail Over Stock Tweets

The Scottish man in question is one James Alan Craig. He lives here, at the “Back O The Wall Farm,” Wigtownshire…

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For the attention of UK investigators looking at possible Chinese-related stock market frauds in London*

The SEC, the DoJ and the FBI are going hard after those who allegedly thought it was fun (and profitable) to manipulate the stock of Chinese entities reversing into US listed shell companies.

Benjamin Wey, chief executive of an entity called New York Global Group, was arrested in Manhattan on Thursday. Various family members and business associates are also in the frame, while Wey’s Switzerland-based banker/broker, Seref Dogan Erbek, apparently “remains at large” (which probably just means he’s in Geneva). Read more

Fraudit failure

If you’re thinking about stock fraud, you don’t want to do it in the US where the SEC has both prosecutorial power and a desire to exercise it.

One other point to consider from the SEC’s latest prosecution: it is possible to pursue individual auditors for missing signs of fraud they should have caught, without destroying the audit firm in a repeat of the Arthur Andersen collapse.

Washington D.C., Sept. 9, 2015 — The Securities and Exchange Commission today charged national audit firm BDO USA with dismissing red flags and issuing false and misleading unqualified audit opinions about the financial statements of staffing services company General Employment Enterprises.

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Someone didn’t read Santiago Principle No. 14…

That would be the Santiago Principles signed up to by sovereign wealth funds in 2008, regarding good governance — including via-a-vis the custodians of SWFs’ often-plentiful assets.

While it was BNY Mellon who paid nearly $15m on Tuesday to settle SEC charges that it handed out internships to the family of a SWF client’s official, in order to retain the fund’s business… Read more

“Tamayo…chewed up or ate post-it notes or napkins after using them to show the stockbroker the ticker symbol…”

It happened (allegedly) below the clock, atop the information booth at New York’s Grand Central Station…

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Yay! The Sand Hill Exchange is back

Despite having been shuttered, brutally, a month ago by the SEC, a Silicon Valley start-up that tried to offer trading in derivatives linked to private SV companies like Uber and Snapchat is suddenly back in business. But there’s a catch.

Sand Hill Exchange had wanted to be the new Wall Street; instead it will now settle for being the new fantasy Las Vegas. Read more

Calling out white males, aged 45-54, working in the Washington DC area…

The naive/conceited Sand Hill Exchange, which promised to offer speculation on the value of private web 3.0 companies, was closed down by the SEC on Monday. Posts on the matter, published by the company, have since been taken down.

We shared Sand Hill’s version of events earlier. Here now is the company’s analysis of traffic to its site — from the SEC.

And sheesh, you can see why they had second thoughts on publication! Read more

Maybe Sand Hill is not the new Wall St after all…

A Silicon Valley start-up that tried to offer trading in derivatives linked to private SV companies like Uber and Jawbone has been shuttered by the US authorities.

For the backstory here, you might want to first read this post from March on the Sand Hill Exchange.

Here’s the company’s version of what happened — published on Monday night, but since then “censored.”

We hope to have more on this a little later… Read more

A regulatory spoof

If American regulators get their way, Navinder Singh Sarao will spend the rest of his life in prison for having done what generations of traders did before him: post bids and offers that he hoped wouldn’t get filled. Meanwhile, sell-siders who deliberately misled investors about the sorts of loans getting packaged into private-label MBS face little threat of jail, nor do the traders who manipulated Libor. This is not the way to restore investor confidence in the markets.

For the few of you who don’t already know what Sarao has been accused of, it helps to consider a question that DE Shaw supposedly used to ask interview candidates before it got posted to the internet: Read more

Executing Trader Sarao

Craig Pirrong, Streetwise prof and futures trading expert, delves into the case of the Hounslow Spoofer, and like us, smells a rat.

For one thing, notes Pirrong, the official complaint doesn’t offer much in the way of detail on the execution strategy. It’s all very well alleging that Sarao spoofed the market with bogus orders, but none of this explains how he actually made money from the strategy. Especially given that the numbers presented don’t seem to add up. Read more

Swimming with sharks

A great piece on the US bond market by Tracy Alloway and Mike Mackenzie has plenty to consider on Monday. Some will be familiar to those in the market — there have been a ton of inflows and liquidity has dried up — but ponder also some of the behaviour described when it comes to allocating bond sales.

Because rules for bond allocations are not set in stone, most bankers and fund managers do not believe they are doing anything illegal, though some expressed misgivings about a practice they describe as more art than science.

A long boom, insatiable demand for what banks are selling, possible different treatment of the large and the small buyer. Any of it starting to sound familiar? Read more

Who me? Oh, I’m just your average insider trader nabbed by the SEC

I’m a man, 43 years old, pretty successful work wise. I invest about $200,000 and earn about $72,000 per tip. Mergers are my trade of choice.

I’m probably richer than you and I have friends and family who like me enough to get illegal alongside — 23 per cent of those who who tip me or get tipped are family members, 35 per cent are friends, and 35 per cent are business associates. Mostly they live pretty close, like 26 miles close. Which is nice. Read more

Slaughter of the shells

Officials from the SEC have been out with axes and clubs across 24 states and also Canada, effectively putting 128 inactive penny dreadfuls or Pink Sheets out of their corporate misery.

Trading suspensions on Monday brought the number of micro cap companies suspended since the regulator began Operation Shell-Expel in 2012 to 800 — some 8 per cent of the OTC market, where all these previously traded. Read more

Anti-Abacus, anti-BISTRO and anti-balance sheet synthetic securitisation


Close your eyes, lay back and imagine yourself as a regulator at the US Securities and Exchange Commission (do we have to? -ed). Read more

The belated Michael Lewis effect?

The five and a half months since this book was published have not been an easy one for the high frequency trading community, certainly in the US…

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The wonky, absurd scales of (insider dealing) justice

On Monday…

Mathew Martoma, the former SAC Capital portfolio manager who refused to co-operate with authorities targeting his old boss Steve Cohen, was sentenced to nine years in prison for insider trading on Monday. Sentencing guidelines indicated Mr Martoma, 40, could serve between 15 and 20 years in prison because of the size of the illicit profits.

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Bonfire of the bond funds

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Dear stoned investor…

The SEC on Friday suspended another marijuana-related “pink sheet” stock — its fifth in the space of two months — and issued a generalised warning to investors who might be suckered by dope-related frauds as marijuana usage becomes progressively less illegal in the US.

FusionPharm of Denver claims to have been selling what look like re-sprayed shipping containers called FarmPods to would-be cultivators… Read more

Guest post: The SEC could find new uses for an old law

It is probably too late to change the number of individuals charged in relation to the financial crisis, even if US regulators reconsider their treatment of offending corporations, but there may be a route to more aggressive enforcement by dusting off a little used part of a 1934 statute. Jordan Thomas, a former SEC Enforcement Director and chairman of the whistleblower representation practice at Labaton Sucharow, outlines a way the Commission could go after malign managers in the future.

Since the Financial Crisis, the Securities and Exchange Commission has been criticized for not holding senior executives accountable for corporate wrongdoing. But Wall Street’s top cop has now signaled that it will begin using a statute that has been off the radar for decades to pursue charges against parties who violate the securities laws “through or by means of any other person.” Read more

A coming bubble in whistleblowing?

There were a few gasps late on Tuesday when the SEC declared that it was awarding more than $14m to an unnamed whistleblower, whose information had helped the US authorities recover “substantial” investor funds in an unnamed case.

That’s quite a prize and will no doubt encourage other would-be latter-day bounty hunters. But there is evidence that the SEC really didn’t want to set this sort of precedent at all. Read more

Jobs for twits, by twits

We are sure this is exactly what the wise legislators of the US had in mind when they passed the Jumpstart Our Business Startups Act last year.

A small internet start-up gets to raise a little bit of capital from private investors without all that cumbersome regulation and public scrutiny so it can invest and hire people. You know, JOBS! Read more

Compliant Twits, or…


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Fed Presidents are not going to let Money Market Funds off the hook

A letter lands from the 12 Presidents of the Federal Reserve, led by consistent money market fund critic Eric Rosengren. Reform has been a marathon and they are going to run along behind the SEC waving a big stick until it is finished: Read more

“Edge”, SEC v Steve Cohen edition

Friday was a very very hot day on the East Coast. We wonder if they’re staying cool on SAC’s trading floor this afternoon…

Click for the SEC’s order alleging that Steve Cohen “failed reasonably to supervise” two SAC traders involved in trading Elan and Dell stock. It’s not the kind of claim against Cohen which many could really have been expecting in this sprawling, almost absurdly diffident insider-trading investigation. Read more

How about that, SEC & CBOE edition

From the SEC’s order setting out a $6m fine in a settlement with the Chicago Board Options Exchange, over some serious failings relating to this probe of an online broker’s obligations under Regulation SHO (on short-selling)…

Self-regulation is a unique and fundamental component of federal securities regulation in the United States…

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Nasdaq’d, SEC edition

We’re glad we kept a screenshot of this moment in stock-market history:

It (ultimately) landed Nasdaq with a $10m fine — the biggest ever for an exchange — and serious egg on its face on Wednesday, after a settlement with the SEC over securities law charges relating to Facebook’s botched IPO. From the releaseRead more