How to avoid the latest SEC scandal
The SEC’s scandal surrounding its investigation of the trading of a controversial $500 million market-making strategy could affect other big financial companies, and may even make the nation’s securities markets less stable, experts say.
The Securities and Exchange Commission (SEC) said in a filing Monday that it is investigating a “pump and dump” scheme in which a single trading firm sold a stock with the intent of creating a short-term profit for itself.
But experts say the SEC has no legal authority to do so and they doubt the agency would ever issue a subpoena demanding the trading firm produce its trading logs.
Instead, the SEC could file a civil suit, seek a declaratory judgment that the scheme violated the Securities Act, or ask the SEC to investigate further.
The SEC’s action follows an SEC investigation in late November that uncovered “possible violations” of securities law.
The SEC said in its filing that it had uncovered evidence that traders had engaged in a “scheme” to “diversify” their portfolio.
That scheme was to “disseminate” the proceeds of the trades to the firm that executed the trades, which was the same one that was allegedly used to create a “short-term” profit.
The move by the SEC comes as the agency is in the midst of a probe into whether a trader who was found to have violated securities law was a victim of a conspiracy.
In the wake of the SEC’s announcement, the CFTC also issued a news release stating it is “aware of the new SEC investigation into a Ponzi scheme that was discovered by the Commodity Futures Trading Commission in late October and is cooperating fully with the SEC.””CFTC is aware of the ongoing SEC investigation and is fully cooperating with the investigation,” the CFCC said.
The CFTC did not provide additional details about the SEC investigation.
In a separate statement, the U.S. Chamber of Commerce, which has long been one of the nations biggest proponents of Wall Street reform, said the SEC was acting “in the best interest of our members.”
“We believe the SEC should have the authority to investigate this matter without fear of reprisal from the company that was engaged in the Ponzio scheme,” the statement read.
“It is unfortunate that the SEC appears to be acting as if it does not have the resources to do its job and has now threatened to take the CF to court to get access to the trading logs of the company involved.”
The SEC is also investigating whether any other firms were involved in the scheme, as well as the CF.
SEC spokesman Tom Miller told Bloomberg that the agency has yet to receive a complaint from a firm.
“While the SEC is still in the process of completing our review, we have received no complaints,” Miller said.
“We are continuing to cooperate fully with our review.”
In addition to the SEC, other regulators are also investigating.
The CFTC is also looking into the trades involving a trader, as is the SEC.
The Treasury Department and the Office of the Comptroller of the Currency are also looking at whether any of the securities that were allegedly used in the trading scheme may have been illegally traded.
The issue has raised concerns about Wall Street’s ability to operate in a safe environment amid a series of scandals over the past year.
The biggest scandal is the LIBOR scandal, which began when Barclays and other banks began to sell risky loans to the financial system to encourage the use of leverage to boost their prices.
It has exposed systemic risk in the financial industry, and the CF was one of several financial institutions that participated in the Libor scandal.
The Wall Street Journal reported on Monday that the CF has received at least $200 million from the U,S.
Department of Justice to investigate the Libors scandal.