Friday, June 9, 2023 | Back issues
Courthouse News Service Courthouse News Service

SEC Accuses E-Broker of Naked Short Selling

WASHINGTON (CN) - The SEC accused optionsXpress, an online brokerage, and its four top officials and a customer of abusive naked short selling.

The SEC sued Chicago-based optionsXpress, its former CFO Thomas E. Stern, of Chicago, and the customer, Jonathan I. Feldman, in one complaint, and sued optionsXpress officials Peter J. Bottini, Phillip J. Hoeh and Kevin E. Strine in the other.

"OptionsXpress failed to satisfy its close-out obligations under Regulation SHO by repeatedly engaging in a series of sham 'reset' transactions designed to give the illusion that the firm had purchased securities of like kind and quantity," the SEC said in a statement announcing its enforcement actions. "The firm and customer Jonathan I. Feldman engaged in these sham reset transactions in a number of securities, resulting in continuous failures to deliver. ...

'Feldman and optionsXpress used sham reset transactions to avoid, sometimes for months, compliance with Reg. SHO's stock delivery requirements," Robert Khuzami, director of the SEC's Division of Enforcement said in the statement." In effect, they 'kited' shares of stock, thus depriving buyers of the benefit of their bargain - prompt delivery of their shares."


Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.