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Gamestop Investigations?

By now, all of our readers are aware of the dramatic rise in Gamestop’s stock, after a short squeeze generated by the retail investors from Reddit. The question I am hearing most now, is, will the SEC do something about it.

Interesting question – but I have to answer with a question – Do something about what? About a group of investors sharing information about a massive short in a security, and discussing buying the stock because the shorts will ultimately have to buy back the stock? Nothing illegal there.

While the political pressure for an investigation will be significant, the real question is did the individuals buying Gamestop do anything illegal?

The answer is in the details. The real question is were there false statements made by the company or a group of individuals which were intended to create an artificial price for the stock, and if so, was that a concerted effort.

There will certainly be an SEC investigation, if it isn’t already in the works. Internet posters are not immune from charges of manipulation. Way back in the year 2000 the SEC investigated and instituted proceedings against an Internet message poster who it accused of engaging in a scheme on the Internet in which he purchased large blocks of thinly traded microcap stocks and, within hours of making such purchases, sent numerous false and/or misleading messages, or “spam,” over the Internet touting the stocks he had just purchased. Lebed then sold all of these shares, usually within 24 hours, profiting from the increased price his messages had caused.  https://www.seclaw.com/15messageposter92000/

So far, there is no evidence of such a scheme, and it appears that the discussions regarding Gamestop were held in public, with message posters discussing the short position, and suggesting, correctly, that the shorts will have to cover their position as some point in time.

However, if the SEC finds false or misleading information in those discussions, or in private discussions between those message posters, all bets are off.

* This article was originally published here

Fed Chair Powell Warns Of ‘Exuberant’ Spending And Price Spikes After Pandemic But Isn’t Worried About Long-Term Inflation

Fed Chair Powell Warns Of ‘Exuberant’ Spending And Price Spikes After Pandemic But Isn’t Worried About Long-Term Inflation “The economy is still horrible,” Powell said of the Fed’s hesitancy to lift its $120 billion-per-month support for the U.S. economy. https://www.forbes.com/sites/jonathanponciano/2021/01/14/fed-chair-powell-warns-of-exuberant-spending-and-price-spikes-after-pandemic-but-isnt-worried-about-long-term-inflation/

* This article was originally published here

Luckin Coffee Agrees to Pay $180 Million Penalty to Settle Accounting Fraud Charges

The Securities and Exchange Commission today charged China-based company Luckin Coffee Inc. with defrauding investors by materially misstating the company’s revenue, expenses, and net operating loss in an effort to falsely appear to achieve rapid growth…

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Mark J. Astarita, Esq. represents investors, financial professionals and firms in litigation, arbitration and regulatory matters across the country. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at mja@sallahlaw.com or by phone at 212-509-6544.


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UBS Dinged in YES Options Case, Complaints Remain on Brokers’ Records – AdvisorHub

An arbitration panel in Boca Raton, FL, has awarded almost $90,000 to a UBS Wealth Management client who alleged that he suffered “out-of-pocket losses” of $402,182 in a failed options overlay strategy known as YES.

It also declined UBS’s request to expunge the investor’s complaint from the record of two advisors who recommended the strategy.

Scores of wealthy UBS customers who invested in the Yield Enhancement Strategy have brought arbitration complaints asserting that their brokers fraudulently presented

Source: UBS Dinged in YES Options Case, Complaints Remain on Brokers’ Records – AdvisorHub

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Robinhood Facing Multiple SEC Investigations Into Its Business Practices

According to Forbes, Robinhood is reportedly facing multiple investigations by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regarding its March service outage, and, separately, 2018 disclosures relating to its revenue practices.

Details on the investigations are scarce. Bloomberg reports that it has received information from a source involved in a joint SEC/FINRA investigation of how the company handled and responded to a major service disruption in March. Separately, the SEC is reportedly looking into public disclosures of the company’s practice of selling client order flow to third-party firms.

https://www.forbes.com/sites/advisor/2020/09/03/robinhood-investigation-sec-finra

SEC Charges Interactive Brokers With Repeatedly Failing to File Suspicious Activity Reports

The Securities and Exchange Commission today announced that Interactive Brokers LLC will pay an $11.5 million penalty to settle charges it repeatedly failed to file Suspicious Activity Reports (SARs) for U.S. microcap securities trades it executed on…

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Have a securities law question? Call Sallah Astarita & Cox at 212-509-6544.

from SECLaw.com

SEC Charges Consumer Loan Company With FCPA Violations

The Securities and Exchange Commission today announced that World Acceptance Corporation, a South Carolina-based consumer loan company, has agreed to pay $21.7 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA). …

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Have a securities law question? Call Sallah Astarita & Cox at 212-509-6544.

from SECLaw.com

Lindsay McCord Named Chief Accountant in Division of Corporation Finance

The Securities and Exchange Commission today announced that Lindsay McCord has been named Chief Accountant in the Division of Corporation Finance. Ms. McCord has served as Acting Chief Accountant in the Division since March 2020, leading its work to…

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Have a securities law question? Call Sallah Astarita & Cox at 212-509-6544.

from SECLaw.com

SEC Charges Affiliated Advisers for Misrepresentations About Payment for Order Flow Arrangements

The Securities and Exchange Commission today filed settled charges against affiliated registered investment advisers WBI Investments Inc. and Millington Securities Inc. for making material misrepresentations to clients about compensation Millington…

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Have a securities law question? Call Sallah Astarita & Cox at 212-509-6544.

from SECLaw.com