SEC clamps down on naked short selling at optionsXpress
17 April 2012 Chicago
Image: Shutterstock
The SEC charged an online brokerage and clearing agency, as well as four of the firm's officials and a customer, in an alleged naked short selling scheme.
The body alleges that Chicago-based optionsXpress and its customer, Jonathan Feldman, repeatedly engaged in a series of sham 'reset' transactions designed to give the impression that the firm had bought certain securities.
Regulation SHO, a package of SEC rules aimed at cracking down on naked short selling, requires a trader to locate shares for borrowing before effecting short sales.
The SEC also named the firm's former chief financial officer, Thomas Stern, in its administrative proceeding, along with optionsXpress and Feldman. Three other optionsXpress officials were named in a separate administrative proceeding and settled the charges against them for their roles in the scheme, but neither admitted or denied the SEC's findings.
According to the SEC, the scheme took place from at least October 2008 to March 2010. The SEC said Feldman in 2009 purchased at least $2.9 billion of securities and sold short at least $1.7 billion of options through his account at the firm.
The firm was acquired by Charles Schwab Corp in September 2011. An optionsXpress spokesman was not available for comment.
The body alleges that Chicago-based optionsXpress and its customer, Jonathan Feldman, repeatedly engaged in a series of sham 'reset' transactions designed to give the impression that the firm had bought certain securities.
Regulation SHO, a package of SEC rules aimed at cracking down on naked short selling, requires a trader to locate shares for borrowing before effecting short sales.
The SEC also named the firm's former chief financial officer, Thomas Stern, in its administrative proceeding, along with optionsXpress and Feldman. Three other optionsXpress officials were named in a separate administrative proceeding and settled the charges against them for their roles in the scheme, but neither admitted or denied the SEC's findings.
According to the SEC, the scheme took place from at least October 2008 to March 2010. The SEC said Feldman in 2009 purchased at least $2.9 billion of securities and sold short at least $1.7 billion of options through his account at the firm.
The firm was acquired by Charles Schwab Corp in September 2011. An optionsXpress spokesman was not available for comment.
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