Securities Lawyer Blog | Victim of Fraud?

TAG | short sales

Nov/11

2

BATS Trading Censured and Fined by FINRA Over Short Sales

Comments off · Posted by Securities Lawyer in FINRA

 

BATS Trading, Inc. (CRD #136734, Lenexa, Kansas)

 

Have submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $307,500. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it executed numerous short sale transactions on its subscribers’ behalf and failed to report each such transaction as short; as a result, the firm failed to report each of these transactions to the NASDAQ Market Center with the correct symbol indicating whether the transaction was a buy, sell, sell short or cross.

These findings stated that the firm executed numerous short sale transactions and failed to report each of these transactions to the NASD/NASDAQ Trade Reporting Facility® (NNTRF) with the correct symbol indicating whether the transaction was a buy, sell, sell short or cross. The findings also stated that the firm executed over 10 million short sale transactions and failed to report each of these transactions to the FINRA/New York Stock Exchange (NYSE) Trade Reporting Facility with the correct symbol indicating whether the transaction was a buy, sell, sell short or cross. The findings also included that the firm failed to accept or decline in the NNTRF transactions in reportable securities within 20 minutes after execution that the firm had an obligation to accept or decline as the order entry identification (OEID) firm. (FINRA Case #2006006862401)

This information was obtained on FINRA’s website from the Disciplinary Actions, October, 2011.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you feel you have become a victim of short-sale losses through BATS Trading, Inc., call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

 

 

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Oct/11

26

UBS will pay $12M over Short-Sales Settling FINRA Claim

Comments off · Posted by Securities Lawyer in FINRA

In a Bloomberg News article from October 25, 2011, we learn that UBS AG, Switzerland’s largest bank, will pay $12 million to resolve Financial Industry Regulatory Authority claims that a brokerage unit allowed millions of short-sale orders to be placed without reasonable grounds to believe that the securities could be delivered.

The article points out that the supervisory system for locating and marking orders at UBS Securities LLC was “significantly flawed” and contributed to violations across its equities-trading business, Washington- based Finra said. The company’s framework wasn’t designed for regulatory compliance until at least 2009, the industry-funded brokerage watchdog said.

For a short sale, an investor sells a security it doesn’t own, betting the price will decline before it’s time to deliver the shares. Under a rule known as Reg SHO, brokers can only accept short-sale orders when they can reasonably ensure the shares needed to cover the bets will be available to the investor at the time of delivery.

“Firms must ensure their trading and supervisory systems are designed to prevent the release of short-sale orders without valid locates, and properly mark sale orders, in order to prevent potentially abusive naked short selling,” Brad Bennett, Finra’s head of enforcement, said in the regulator’s statement. “The duration, scope and volume of UBS’s locate and order- marking violations created a potential harm to the integrity of the market.” In settling the claims, UBS consented to the findings without admitting or denying wrongdoing, Finra said.

Substantial Investments

“UBS made a substantial investment to upgrade systems and procedures, including supervisory protocols, IT change control processes, and compliance programs to tighten its Reg SHO controls,” Christiaan Brakman, a spokesman for the Zurich-based bank, said in an e-mailed statement. “This investigation is concluded and all issues identified by Finra and UBS have been remediated.”

UBS’ internal controls came under scrutiny last month after Kweku Adoboli, a trader who worked on the exchange-traded funds desk in London, was arrested for allegedly racking up $2.3 billion in losses from unauthorized trading. Adoboli, who has been in custody since his Sept. 15 arrest, is expected to enter a plea on the accusations at a Nov. 22 hearing.

According to the Bloomberg News article, the bank said  it filed a document to the U.S. Securities and Exchange Commission, stating that management has determined its internal controls weren’t effective on Dec. 31, 2010. UBS has taken and continues to implement measures to address the deficiencies, it said.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you feel you have become a victim of short-sale losses through UBS Securities, LLC, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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