Post by jannikki on Oct 1, 2006 17:54:20 GMT -4
Graycort Settles SEC Short-Selling Charges
Friday September 29th, 2006 / 0h17
(Adds SEC comments in fifth through seventh paragraphs.)
By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- A San Francisco private investment fund has agreed to pay a $100,000 civil penalty and give up money that it improperly earned through short sales that violated securities regulations, the Securities and Exchange Commission said Thursday.
Graycort Financial LLC settled with the SEC without admitting or denying wrongdoing. An attorney for the fund didn't return a phone call.
In a short sale, investors bet that a stock price will fall. Investors sell borrowed shares, hoping to return the stock to the lender when the price is lower, and pocket the difference. While short selling isn't illegal, regulators have been cracking down on some manipulative methods for finalizing such trades.
The SEC alleged that Graycort in 2005 shorted shares of Nutrisystem Inc. (NTRI) and Perini Corp. (PCR) just before the companies planned to sell new shares in follow-on offerings. Then, once the stock price had fallen, Graycort purchased shares issued in the follow-on offerings, the SEC said. SEC rules ban using stock sold through such public offerings to cover recently placed short sales because the tactic drives down the price of the stock offered by the company.
After violating the rules, Graycort placed orders to buy and sell the same stock to make it appear as if it was following the rules, the SEC said.
"Graycort really took it one step further," Erin Schneider, an SEC enforcement attorney, said. "It engaged in sleight-of-hand trading practices to make it look like it was compliance with the rule, when it wasn't."
In 2004, when the SEC approved Regulation SHO, it issued guidance to make clear that it frowned upon sham transactions structured to make it appear as if short sellers were in compliance with the anti-manipulation short-selling regulations. The SEC has brought only a handful of cases alleging such tactics, Schneider said.
In addition to a civil penalty, Graycort will give up $105,465 in improperly earned profits and pay interest on it, the SEC said.
-By Siobhan Hughes, Dow Jones Newswires, 202-862-6654; siobhan.hughes@dowjones.com
www.easybourse.com/Website/dynamic/News.php?NewsID=64352&lang=fra&NewsRubrique=2
Friday September 29th, 2006 / 0h17
(Adds SEC comments in fifth through seventh paragraphs.)
By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- A San Francisco private investment fund has agreed to pay a $100,000 civil penalty and give up money that it improperly earned through short sales that violated securities regulations, the Securities and Exchange Commission said Thursday.
Graycort Financial LLC settled with the SEC without admitting or denying wrongdoing. An attorney for the fund didn't return a phone call.
In a short sale, investors bet that a stock price will fall. Investors sell borrowed shares, hoping to return the stock to the lender when the price is lower, and pocket the difference. While short selling isn't illegal, regulators have been cracking down on some manipulative methods for finalizing such trades.
The SEC alleged that Graycort in 2005 shorted shares of Nutrisystem Inc. (NTRI) and Perini Corp. (PCR) just before the companies planned to sell new shares in follow-on offerings. Then, once the stock price had fallen, Graycort purchased shares issued in the follow-on offerings, the SEC said. SEC rules ban using stock sold through such public offerings to cover recently placed short sales because the tactic drives down the price of the stock offered by the company.
After violating the rules, Graycort placed orders to buy and sell the same stock to make it appear as if it was following the rules, the SEC said.
"Graycort really took it one step further," Erin Schneider, an SEC enforcement attorney, said. "It engaged in sleight-of-hand trading practices to make it look like it was compliance with the rule, when it wasn't."
In 2004, when the SEC approved Regulation SHO, it issued guidance to make clear that it frowned upon sham transactions structured to make it appear as if short sellers were in compliance with the anti-manipulation short-selling regulations. The SEC has brought only a handful of cases alleging such tactics, Schneider said.
In addition to a civil penalty, Graycort will give up $105,465 in improperly earned profits and pay interest on it, the SEC said.
-By Siobhan Hughes, Dow Jones Newswires, 202-862-6654; siobhan.hughes@dowjones.com
www.easybourse.com/Website/dynamic/News.php?NewsID=64352&lang=fra&NewsRubrique=2