Prime Brokers investigated, sued, for overcharging clients for stock lending services, and not delivering the stock
Two class action lawsuits filed by hedge funds in Manhattan federal court indicate major problems in U.S. stock markets. The hedge funds blame big brokerage firms for failing to deliver shares of stock "sold short" by the hedge funds. The problem: buyers who paid for shares didn't get the stock, but don't know it.
The hedge funds - Electronic Trading Group LLC and Quark Fund LLC - say they were swindled by their "prime brokers," including Merrill Lynch, Banc of America Securities, Goldman Sachs, Lehman Brothers, Citigroup, Bear Stearns and Morgan Stanley. ETG and Quark allege their prime brokers conspired to charge very high fees for securities lending services and to fail-to- deliver (FTD) shares required by law for "short sale" purposes.
In separate suits, ETG and Quark allege the conspiracy also defrauded other hedge funds in the same way over a period of years. They ask the court to certify a class of all such hedge funds so all may recover damages.
SAN FRANCISCO (MarketWatch) - Federal prosecutors and regulators have begun investigating possible overcharging for stock lending, a service that helps hedge funds and other traders sell short, The Wall Street Journal reported Tuesday. The U.S. attorney for the Eastern District of New York in Brooklyn has begun investigating potential overcharging and the use of bogus "finder's fees," the newspaper said, citing people familiar with the case. The prosecutor's office is working with the Securities and Exchange Commission and the New York Stock Exchange, the newspaper added. Robert Nardoza, a spokesman for the U.S. attorney in Brooklyn, declined to comment.
Forza v. Morgan Stanley, 06-cv-13676, U.S. District Court, Southern District of New York (Manhattan).
Goldman, 12 Other Firms Named in Short-Seller Suit (Update3)
By David Glovin
Dec. 4 (Bloomberg) -- Morgan Stanley, Goldman Sachs Group Inc. and 11 other securities firms have been accused in a lawsuit of conspiring to rig the fees charged to short sellers.
Short sellers borrow securities and then sell them in anticipation of making a profit by buying the securities back after their price has fallen. Short sellers must pay fees to cover the cost of borrowing the shares.
In a class action filed in federal court New York on Dec. 1, two short sellers claimed that the 13 firms conspired to charge excessive fees for certain ``hard-to-borrow'' stocks, in violation of antitrust laws. The defendants locate, borrow and deliver stocks involved in most short sales, the complaint said.
The firms ``orchestrated a massive scheme whereby they have combined and conspired to raise, fix, and maintain, at artificially inflated levels, the fees paid by plaintiffs,'' the complaint said.
Plaintiffs Forza Capital Management LLC of Bend, Oregon, and BHL Capital Partners LP of Westport, Connecticut, who are represented by Milberg Weiss Bershad & Schulman, are seeking unspecified damages.
``We never comment on pending litigation,'' said Peter Rose, a spokesman for New York-based Goldman Sachs, the biggest U.S. securities firm by market value. Morgan Stanley spokeswoman Mary Claire Delaney declined to comment.
johmond: So proboards wants a contribution now, how about they put back 1MM's......
Feb 24, 2021 18:00:23 GMT -4
mayz: Still here and keeping the faith.
Feb 24, 2021 18:35:01 GMT -4
Jed: Did you ALL know that Proboards was collecting and selling our personal information all these years??? Scroll to the very bottom of the donation page www.proboards.com/contribute See where it says “Do Not Sell My Personal Information"
Feb 24, 2021 20:16:41 GMT -4
narvo: Wondering if anyone here ever knew the shareholder last name Ehmann from the desert area of California? He was a good man and he liked fell off the face of the Earth. I am sensing a bad feeling. He held many shares. Thx, Narvo
Feb 25, 2021 0:20:13 GMT -4
bbildman: 2 Covid Moderna vaccine shot done, nd I am still alive
Feb 25, 2021 16:14:52 GMT -4
narvo: Another link with CMKX in it.QFS Schedule: According to Military Intel Contact Tier 4B should be notified to set redemption/ exchange appointments on Mon. 1 March or Tues. 2 March,though it may happen sooner.QuantumFinancialSystem anonup.com/thread
Feb 28, 2021 0:02:28 GMT -4