Activist investor Plute now calls for the removal of Virtu CEO Doug Cifu, highlighting the CEO’s embarrassing and childish posts on X.
The Pulte Family Office, an activist shareholder in Virtu Financial and part of the family behind one of the largest homebuilders in the United States, PulteGroup, is advocating for significant changes within the company.
William J. Pulte, the Chairman of the Pulte Family Office, has publicly urged Virtu Financial to consider selling itself to a third-party private equity firm or another public company.
This call for action comes after what Pulte describes as a thorough review of the company’s operations and management.
Pulte expressed his concerns regarding the current leadership of Virtu, particularly towards CEO Doug Cifu.
He stated, “After significant review and attempts to work with management constructively, it appears to us that current CEO Doug Cifu is not focused on building a materially bigger business and spends precious time tweeting on items not related to the core operations of the company.”
This critique highlights a perceived lack of direction and focus within the company, prompting Pulte to suggest that it may be time for Virtu to be placed in the hands of more professional owners who can unlock its potential.
In his statement, Pulte emphasized the urgency of the situation, predicting that if changes are not made soon, Virtu Financial “will and should be sold.”
He indicated that the Pulte Family Office is prepared to assist in ushering in a new era for Virtu, but also warned that if the company does not explore a sale, they may resort to a proxy contest or other necessary legal actions to push for change.
The call for change at Virtu Financial comes against a backdrop of scrutiny regarding the company’s practices.
There have been allegations and concerns raised about Virtu’s market manipulation tactics and how they may have affected investors.
Some notable instances include:
High-Frequency Trading Practices: Virtu has faced criticism for its high-frequency trading strategies, which some argue can create an uneven playing field in the markets.
Critics claim that these practices can lead to market manipulation, disadvantaging retail investors who do not have access to the same technology or speed.
Regulatory Scrutiny: The firm has been under the watchful eye of regulators, with investigations into its trading practices.
For example, in 2020, the SEC fined Virtu $1.25 million for failing to comply with certain regulations related to its trading activities, which raised questions about its commitment to fair trading practices.
Market Volatility: During periods of significant market volatility, such as the GameStop trading frenzy in early 2021, Virtu’s role as a market maker, as well as Citadel’s was scrutinized.
Critics argued that the firm’s manipulative actions during this time may have contributed to the chaos in the markets, leading to calls for greater transparency and accountability in its operations.
As the firm faces scrutiny over its trading practices and market behavior, the call for a potential sale or restructuring may resonate with other investors who share similar concerns.
Recently, in a heated battle on X, former Meta Materials CEO George Palikaras said Virtu may be breaking anti-trust laws through its practices involving the sale of trading data.
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Barclays and Citi have now been fined for naked short selling by South Korea, with authorities stating they are considering record-high fines for the violations.
South Korea’s financial regulators are contemplating significant fines for Barclays plc and Citigroup Inc. due to their alleged illegal short-selling activities, which could result in the highest penalties of this kind in the country’s history.
According to sources within the Korean financial authorities, a recent investigation by the Financial Supervisory Service (FSS) revealed that both banks engaged in naked short-selling of Korean stocks.
While short-selling is a legitimate trading strategy in South Korea, naked short-selling—selling shares without first borrowing them or confirming that they can be borrowed—is prohibited under the Capital Markets Act.
A committee within the Financial Services Commission (FSC) is currently reviewing the FSS’s findings.
An official indicated that they are considering imposing a fine of up to 70 billion won (approximately $50 million) on Barclays and a maximum of 20 billion won on Citigroup.
The final decision will be made by the FSC following this review.
If Barclays is fined 70 billion won, it would set a record for fines related to illegal short-selling in Korea.
Last year, fines for 35 short-selling violations totaled 37.1 billion won, with the previous highest fine being 27.17 billion won imposed on two subsidiaries of the former Credit Suisse Group.
Since the government increased penalties for such violations in 2021, fines for short-selling infractions have risen.
Authorities are now able to impose fines equal to 100% of the profits gained from these violations.
However, it remains uncertain whether they will impose such steep fines on Barclays and Citigroup before short-selling resumes in Korea in March 2025.
A market-wide ban on stock short-selling was implemented in November 2023, which has been extended through the first quarter of 2025.
FSC Vice Chairman Kim So-young confirmed that short-selling is set to resume on March 31.
The ban on legitimate short-selling has been viewed as a barrier to foreign investment in Korean stocks.
In June, MSCI downgraded Korea’s short-selling accessibility in its annual review, which could hinder its inclusion in MSCI’s developed-markets index.
Multinational banks have strongly protested against fines for short-selling violations.
For instance, BNP Paribas has filed a lawsuit to overturn its fine, claiming that its naked short-selling was neither intentional nor profitable.
In December, the FSC fined BNP Paribas, its Korean brokerage, and HSBC Holdings a total of 26.52 billion won for naked short-selling activities.
The Korean financial regulator maintains that banks must be held accountable for their negligence in managing these prohibited trades.
Korean financial authorities assert that the Capital Markets Act allows traders to short only shares they have borrowed, rendering naked short-selling illegal regardless of the outcomes of the transactions.
However, Korea’s judiciary has ruled that only shares sold without prior borrowing are subject to fines.
For example, if an investment bank places a market order to short 10 billion won worth of shares without borrowing them, but only sells and repurchases 1 billion won worth, the fine would only apply to that final 1 billion won transaction.
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