Tag: SEC (Page 2 of 17)

Virtu Faces New Enforcement Action by the SEC

Market News Daily - Virtu Faces New Enforcement Action by the SEC.
Market News Daily – Virtu Faces New Enforcement Action by the SEC.

Market maker Virtu is currently facing new enforcement action by the Securities and Exchange Commission (SEC).

(WSJ) The firm disclosed last week that it is facing a potential enforcement lawsuit from the Securities and Exchange Commission.

Virtu disclosed in a quarterly filing after Friday’s closing bell that it had engaged in settlement discussions with the SEC about an investigation related to “information barriers policies and procedures” between January 2018 and April 2019.

The company first disclosed the probe in February. Its updated disclosure suggested that the SEC could be moving forward with a lawsuit.

Virtu said it “currently believes it may receive a Wells notice from the SEC,” referring to a type of letter that the agency’s staffers send to companies or individuals to inform them of a possible enforcement action.

A Virtu spokesman said the investigation was “primarily focused on an access controls weakness in one of our internal back office systems containing post trade information that theoretically could allow certain system users access greater than what was intended by our policies.”

“We have no reason to believe and have found no evidence that anyone ever made any improper use of any client information”, said Virtu.

SEC Fines Virtu for Abusing Dark Pools

In 2019, the SEC announced that Virtu Americas LLC (f/k/a KCG Americas LLC) agreed to pay $1.5 million to settle charges for failing to comply with Regulation SCI.

According to the SEC’s order, KCG Americas operated an alternative trading system, or ATS, commonly referred to as a “dark pool.”

An ATS that exceeds certain trading volume thresholds is required to comply with Regulation SCI.

The SEC order finds that KCG Americas implemented an automated system that was intended to keep its dark pool’s trading volume below the volume thresholds by discontinuing trading in particular securities before the thresholds were met.

KCG Americas relied on this system for more than a year and half.

However, according to the SEC’s order, the system did not function as intended, causing trading to exceed the thresholds that triggered the need to comply with Regulation SCI.

The SEC’s order finds that Virtu willfully violated the policy and procedure.

Without admitting or denying the SEC’s findings, Virtu consented to the entry of a cease and desist order and agreed to be censured and to pay a penalty $1.5 million.

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Market News Today – Virtu Faces New Enforcement Action by the SEC.

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35,000 Retail Investors Sign SEC Letter for New Rules

Market News Daily - 35,000 Retail Investors Sign SEC Letter for New Rules.
Market News Daily – 35,000 Retail Investors Sign SEC Letter for New Rules.

Nearly 35,000 retail investors have signed a letter to the SEC published by We The Investors requesting improvements to market rules and new disclosures.

The letter is introducing new disclosure in lending transparency, margin transparency, netting transparency, FTD transparency, as well as disclosure of registration, and many other rules that will help level the playing field for retail investors.

We The Investors has given retail investors an organized, professional, and formal stance in the finance world.

For once, Wall Street vs Main Street are going head-to-head like never seen before.

Retail investors have become highly knowledgeable about the stock market and how regulation is primarily tailored to better suit institutional investors over the average investor.

This decade is going to bring forth some of the biggest changes in the stock market.

Here are the latest news and updates.

We The Investors SEC Letter

Market News Daily - 35,000 Retail Investors Sign SEC Letter for New Rules.
Market News Daily – 35,000 Retail Investors Sign SEC Letter for New Rules.

“Dear Chairman Gensler,

Since the launch of We The Investors in March, 2022, we have had over 100,000 retail investors sign up to support our various efforts to advocate for five basic principles in market reform: transparency, simplicity and fairness, choice and control, best execution and better settlement and clearing.

Our grassroots advocacy campaign has a simple goal – to empower retail investors to represent themselves while advocating for market structure reforms.

Today we write to you to continue this campaign and urge you to address one of the most opaque areas of market structure – the settlement and clearing systems that have problematic disclosures around stock lending, failures to deliver (“FTDs”), margin and netting, and the practices that enable business models predicated on FTDs.

When you discussed naked shorting and FTDs on the Jon Stewart podcast, you agreed that “we need more transparency and better transparency about a really core part of the market [] when somebody sells securities they don’t own.”

The Commission has focused with its recent proposals (10c-1 and 13f-2) on disclosure of stock borrowing and short selling by investment managers, and we applaud and support those efforts. 

However, we do not believe that these efforts go far enough, and we would like the SEC to re-examine the disclosures and mechanisms in place in this “core part of the market.”

As such, we write to you requesting the following improvements to market rules and disclosures – a roadmap for change.

Retail Investors Propose New Disclosures from SEC

Market News Daily - 35,000 Retail Investors Sign SEC Letter for New Rules.
Market News Daily – 35,000 Retail Investors Sign SEC Letter for New Rules.

Nearly 35,000 retail investors have signed an SEC letter proposing new disclosures and rules for market transparency.

Outlined below are the disclosures and rules detailed in the letter.

“First, we believe that there is a comprehensive set of new disclosures that could shed light into this opaque portion of the market:

  • Lending Transparency: Retail investors have the right to know whether their securities have been lent out, and how much revenue the broker has received.
  • Margin Transparency: Investors need visibility into the estimated margin per security for Clearing Brokers.
  • Netting Transparency: Investors need disclosure of gross versus net notional or share count per security to help understand trading dynamics and discern the level of real investment versus intraday trading activity.
  • FTD Transparency: Failure To Deliver disclosures need to be updated more often, and include more information, including how and when FTDs are remediated, what type of counterparty is responsible for the failure (bucketed into clearing broker, exempt market maker or custodian), and how long the FTDs remained open.
  • Disclosure of Registration: Public companies should be required to disclose directly registered shareholder numbers on all 10-Q and 10-K reports.

Next, we believe that retail brokers must be obligated to give their investors more control over the lending of their securities and how those securities are registered:

  • NOBO/OBO designations: Brokers should explain to investors the choices they may make as it relates to transparency of share ownership, where shares are recorded in a brokerage account in beneficial format. The default options should always be NOBO (non-objecting beneficial owner). Shielding holdings from investee companies through the use of OBO (objecting beneficial owner) designations should be a right that an investor should opt in to. Brokers should provide the investor’s email address as part of any disclosure of NOBO holdings.
  • Control of Stock Lending: Investors have the right to decide whether their securities can be lent out to short sellers. Disclosures around account types and the implications therein need to be made simpler, easier to understand, and more explicit in the account creation process.
  • Control of Registration: Investors should be able to choose whether their shares are to be held in a brokerage account or in direct registration form in the investor’s own name on the company’s share register. Brokers should be required to support the direct registration of shares in an investor’s name.
  • Investor Communications and Proxy Voting: Investors should be able to receive their communication directly from the company they invest in and not have their shareholding pooled with other clients of the broker, whose interests may not be aligned. Investors should be able to vote directly with the company, and have their voice heard at general or extraordinary shareholder meetings. Their votes should be directly confirmed by the company or its agent.

Retail Investors Demand Change in the Market

“Finally, we urge you to reform the settlement and clearing system to end problematic practices that can distort price discovery and supply/demand dynamics:

  • End the “Market Maker” Exemption to Reg SHO: As SEC enforcement has shown, so-called “market makers” have abused this exemption to Reg SHO that allows them to sell shares short without a locate. Markets would better reflect actual supply and demand dynamics if all trading firms had to locate shares before selling short. The SEC should further set a goal of a more robust, transparent, electronic locate workflow and standard.
  • End “Fails as a Business Model”: Too many firms rely on failing to deliver on their short sales to prop up or sustain their business models. This practice must be ended, either by enforcing mandatory buy-ins or through interest charges on failures. This would entail a more comprehensive overhaul of the US settlement system, and one potentially modeled on the European Settlement Discipline Regime.

We urge you to take these actions to improve transparency in markets, shine a light on the most opaque part of our market’s plumbing, to ensure that prices in the market reflect actual supply and demand, and to guarantee that brokers give investors the appropriate level of control and disclosure so they can make the decisions appropriate to their unique, individual circumstances.

We would be happy to meet with you and discuss any of these proposals in more detail.”

You can sign the official letter from We The Investors on their official website.

If you would like to receive more updates and news for the retail community like this, join the newsletter below.

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Market News Today - 35,000 Retail Investors Sign SEC Letter for New Rules.
Market News Today – 35,000 Retail Investors Sign SEC Letter for New Rules.

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Wall Street Threatens to Sue SEC if New Proposals Pass

Market News Daily - Wall Street Gets Ready to Sue SEC if Proposals Pass.
Market News Daily – Wall Street Threatens to Sue SEC if New Proposals Pass.

Wall Street is threatening to sue the SEC if proposals that will change how retail orders are executed gets passed.

Gensler has been critical of payment for order flow (PFOF), whereby some retail brokers (including Schwab, ETrade and Robinhood) route orders to electronic market makers known as wholesalers (including Citadel and Virtu), who pay the brokers for access to that order flow.

These wholesalers may send the orders to exchanges and profit from spreads or even from price direction through the derivatives market, hence the major conflict of interest.

SEC Commissioners Hester Peirce and Mark Uyeda, both Republicans, also filed statements opposing the proposal. 

“This latest effort to order competition threatens to create disorder in the capital markets, the functioning of which is so important to the rest of our economy,” Peirce wrote in a statement. 

The Intercept wrote a piece on Hester Peirce in 2015 titled, “SEC Nominee To Oversee Wall Street Works At Think Tank Dedicated To Blocking Regulation.”

And according to the research, Hester Peirce received 98% of her salary from the Mercatus Center, a “think tank” that provides an academic façade to a radical anti-regulatory agenda.

In other words, Hester is a plant on the SEC meant to cater to Wall Street, not retail investors.

‘We The Investors’ Challenges Wall Street

‘We The Investors’ is taking Wall Street head on.

More than 1,300 letters have been submitted to the SEC supporting rules proposed in December that represent the biggest changes to equities trading in nearly two decades, according to Reuters.

The collective of retail investors have joined ‘We The Investors’ led by Dave Lauer in efforts to combat Wall Street as a legitimate organization that sprouted from the events of the ‘meme stock’ frenzy in 2021.

We The Investors has held two online meetings since December with SEC Chair Gary Gensler, who took questions directly from retail investors on the proposals, which include requiring most retail stock orders to be sent to auctions to boost competition.

Other proposed rules call for a new standard for brokers to demonstrate they’ve gotten the best execution for clients on transactions, as well as lower trading increments and access fees on exchanges, and stronger disclosure around retail order executions.

But Wall Street is pushing back.

The NYSE teamed up with retail broker Charles Schwab Corp and market maker Citadel Securities earlier this month to ask the U.S. Securities and Exchange Commission to withdraw two recently proposed rules aimed at revamping how stocks trade.

The move represents a coordinated industry push back against what are potentially the most impactful proposals in the SEC’s biggest attempt to reform stock market rules in nearly 20 years.

The Securities and Exchange Commission scrapped plans to vote Wednesday on a rule that would have increased regulators’ visibility into financial risks at some hedge funds and private equity funds.

After scheduling the vote last week, the five-member commission “decided to take a little more time” on the rule, an SEC spokeswoman said.

The SEC Faces Potential Lawsuits from Wall Street

Market News Today - Wall Street Gets Ready to Sue SEC if Proposals Pass.
Market News Today – Wall Street Gets Ready to Sue SEC if Proposals Pass.

Wall Street institutions are already threatening litigation if the proposals go through. 

“Ultimately, it’s going to end up, unfortunately, sadly, probably in litigation [if Gensler] decides to go down this road,” Virtu CEO Doug Cifu said in an interview at the Securities Traders Association of New York conference on March 27th at the NYSE. 

Cifu specifically cited the Administrative Procedures Act (APA), which governs the way government agencies may propose and establish regulations. 

The SEC must follow procedures outlined in the APA.  If not, it can get sued. 

Gensler is proposing a new rule, Regulation Best Execution, that would establish a national best execution standard to ensure broker-dealers send orders to the venue that will get the best price for buyers and sellers.

But FINRA is currently in control of the best execution rule, a rule Gensler believes the SEC should have, not FINRA.

FINRA is under serious scrutiny due to many scandals with the most recent having to do with the U3 halt and delisting of MMTLP stock.

Retail investors have also criticized the SEC for kneeling to Wall Street and failing to protect small investors from predatorial market practices.

Many in the retail community say SEC commissioners should be voted in, not appointed by the U.S. President.

Market News Published Daily

Market News Today - Wall Street Gets Ready to Sue SEC if Proposals Pass.
Market News Today – Wall Street Gets Ready to Sue SEC if Proposals Pass.

For stock market, business news and updates, join the newsletter to receive weekly market news and notifications straight to your inbox.

Franknez.com is the media site that keeps retail investors informed.

You can also follow Frank Nez on TwitterInstagramFacebook, or LinkedIn for daily posts.


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  • Gain access to EXCLUSIVE FrankNez articles you won’t find here.
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MMTLP Scandal Recognized as Biggest Wall Street Fraud

Market News Daily: MMTLP scandal gets recognized as one of the biggest Wall Street fraud events.
Market News Daily: MMTLP scandal gets recognized as one of the biggest Wall Street fraud events.

The MMTLP scandal is being recognized as one of the biggest Wall Street frauds of the decade.

One of the most recent scandals has been that of the ‘meme stock’ frenzy when broker firms, hedge funds, and even regulators colluded to stop AMC, GameStop, and other stocks from rising.

Investors who held shares of MMTLP stock on the record date of December 12 would receive a preferred dividend of Next Bridge Hydrocarbon on Wednesday, December the 14th.

Investors anticipated a long-awaited MMTLP short squeeze during the last few trading days prior to the spinoff — primarily due to big buying volume flooding the market to receive Next Bridge Hydrocarbon shares.

However, MMTLP stock stopped trading on Thursday, December 8 after FINRA delisted the security without notice or warning.

FINRA released the following statement:

NOTE: This report has now been acknowledged by the Congressional Research Service.

“Effective Friday, December 09, 2022, the Financial Industry Regulatory Authority, Inc. (“FINRA”) halted trading and quoting in the Series A preferred shares of Meta Materials Inc. (OTC Symbol: MMTLP).

Pursuant to Rule 6440(a)(3), FINRA has determined that an extraordinary event has occurred or is ongoing that has caused or has the potential to cause significant uncertainty in the settlement and clearance process for shares in MMTLP and that, therefore, halting trading and quoting in MMTLP is necessary to protect investors and the public interest.

The trading and quoting halt will end concurrent with the deletion of the symbol effective Tuesday, December 13, 2022.”

“See also Form S1 Registration Statement for Next Bridge Hydrocarbons, Inc. stating that…immediately after the Spin-Off, all shares of Series A Non-Voting Preferred Stock of Meta shall be cancelled. Available here.”

Next Bridge Hydrocarbons Weighs In

In simple terms, FINRA’s only explanation was that the halt was due to ‘uncertainty’ in the settlement process which could harm investors and public interest.

And perhaps that’s true — though shareholders don’t think they were referring to retail investors at all, but rather FINRA’s private investors and institutional partners, the hedge funds.

Next Bridge Hydrocarbons released the following statement regarding the MMTLP halt.

“We recognize that some of our shareholders who owned Meta’s Series A Non-Voting Preferred Stock prior to the Spin-Off might have been affected by FINRA’s halting of the trading in that stock while the Company was still wholly owned and controlled by Meta.

The current board and officers of the Company have no information from FINRA regarding the Trading Halt other than the information in the public notice published by FINRA announcing the Trading Halt.

Further, FINRA did not provide any advance notice to the Company or Meta prior to its initiating the Trading Halt.

While we were not involved in the Trading Halt, we certainly empathize with anyone adversely affected by the Trading Halt and are assessing the matter.

The Company believes that our primary means of delivering shareholder value is to develop our interests in the Orogrande Basin, and we remain focused on this objective.”

But investors remain confused as to what happened to their money which was frozen from trading prior to the delisting.

What’s happened with MMTLP has become one of the biggest Wall Street frauds in financial history.

Real People Have Been Affected

Market News Daily: MMTLP scandal gets recognized as one of the biggest Wall Street fraud events.

“It was the anniversary of my husband’s passing; it was a really hard time. My kids all understood what was happening with MMTLP, and it was hard for them to understand, it was hard for me to admit to my kids the depth of the dishonesty, and lying, and cheating, and stealing that goes on in our country”, says MMTLP investor Deborah W.

“I went through the 18 months of just stringing me and my family and everyone everybody with holding off on things that we might have wanted to do; vacations we wanted to take, because I didn’t want to pull any of the money out of what I had in. And MMTLP, I had liquidated other positions, I took every spare dime we had, and I put it towards MMTLP”, says Huck, another MMTLP investor.

FINRA placed a U3 halt on MMTLP on the final days before it was delisted.

It was one of three U3 halts in the OTC market in U.S. history.

The U3 halt froze MMTLP shares so shareholders couldn’t buy nor take their money out from the security.

MMTLP was delisted, robbing MMTLP investors of their money right in front of their eyes.

The delisting protected hedge funds from having to close their short positions right before shares of MMTLP stock began to rise, or squeeze.

Retail investors are naming the MMTLP scandal one of the biggest Wall Street frauds in financial history.

Investors lost their entire retirement funds and life savings in MMTLP.

Aside from the public announcements in the beginning of this article, FINRA nor the SEC have been able to explain truly what happened to investors shares of Next Bridge Hydrocarbons, or their money invested in MMTLP stock.

In the video below, MMTLP Studios goes over possible solutions the SEC and FINRA can take to make things better, along with other investor comments.

Were You Affected by the MMTLP Wall Street Fraud?

First, I’d like to say that my heart goes out to those affected by this unfair and unprecedented event in MMTLP.

Many investors in several communities are experiencing blatant manipulation in their favorite company stock in similar or their own unique way.

Raising awareness is the first step to getting the message seen.

I’ve seen and heard some of your stories through the community.

If you were affected by the MMTLP Wall Street fraud and would like to share your story, please feel free to comment it down below for other retail investors to see.

Share this article to get your voice and story heard.

Market News Published Daily

Market News Daily: MMTLP scandal gets recognized as one of the biggest Wall Street fraud events.
Market News Today – MMTLP Scandal Recognized as Biggest Wall Street Fraud.

For stock market, business news and updates, join the newsletter to receive weekly market news and notifications straight to your inbox.

Franknez.com is the media site that keeps retail investors informed.

You can also follow Frank Nez on TwitterInstagramFacebook, or LinkedIn for daily posts.


Franknez.com

You can now read exclusive FrankNez articles for only $1/mo.

  • Gain access to EXCLUSIVE FrankNez articles you won’t find here.
  • Become part of a private and safe Discord community, just for retail investors.
  • Get drawn at the end of the year for holiday giveaways.

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