OptionsXpress accused of skirting naked-short-sale rules

Firm, executives conducted series of sham transactions: SEC

Apr 16, 2012 @ 3:58 pm

The U.S. Securities and Exchange Commission accused an online brokerage firm and four of its executives of engaging in naked short-selling in violation of securities laws.

OptionsXpress Holdings Inc. conducted a series of sham “reset” transactions designed to give the illusion that the firm had purchased securities to comply with obligations associated with short sales, the SEC said in a statement today. The agency also accused an OptionsXpress customer of taking part in the alleged scheme, which it said violated Regulation SHO requirements.

The firm and the customer “used sham reset transactions to avoid, sometimes for months, compliance with Reg. SHO's stock delivery requirements,” SEC Enforcement Director Robert Khuzami said in the agency's statement. “In effect, they ‘kited' shares of stock, thus depriving buyers of the benefit of their bargain -- prompt delivery of their shares.”

According to the SEC, the misconduct occurred from at least October 2008 to March 2010. In September, Chicago-based OptionsXpress became a wholly owned subsidiary of The Charles Schwab Corp.

--Bloomberg News--

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Regulators' gloves are coming off with cybersecurity. Put up your dukes with these tips

Updated guidelines and some of the first-ever rule enforcements signal that regulators are getting serious about holding firms accountable for data breaches, according to special projects editor Liz Skinner and technology reporter Ryan Neal.

Recommended Video

Keys to a successful deal

Latest news & opinion

Advisers throw cold water on FIRE movement

Millennials love it, advisers don't: Turns out, extreme early retirement is a suitable goal for almost nobody.

10 universities with the most billionaire alumni

These 10 American schools have the greatest number of alumni who are billionaires.

Top-performing ETFs of 2018

The markets took a beating last year, but these exchange-traded funds bucked the trend

Morningstar says investors rushed the exits in 2018

Net flows into mutual funds and ETFs were the lowest since the 2008 financial crisis, while money-market funds captured inflows.

Widow awarded $4.2 million by Finra panel for theft by ex-Royal Alliance broker

The former broker, Gary Basralian, earlier pleaded guilty to theft and is facing up to 20 years in prison.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print