Quote from Don Bright:
Don
BTW, which arrest, etc. are you referring to? I must have missed it. Saw something on Tuesday "Smart Online CEO,5 Others Arrested In Sec Fraud Case " (not them?)
=WSJ:5 Ex-Workers At Brokerage Firms To Face Criminal Charges
By Paul Davies
Of THE WALL STREET JOURNAL
NEW YORK (Dow Jones)--Five former employees at several Wall Street brokerage
firms are expected to be face criminal charges in Brooklyn later Thursday in
connection with alleged abusive stock-lending practices, according to people
familiar with the matter.
Federal Bureau of Investigation agents arrested the five individuals early
Thursday morning. They are expected to be arraigned in federal court in
Brooklyn. The U.S. Attorney in the Eastern District of New York is expected to
charge the individuals in connection with alleged bribes and kickbacks stemming
from a stock-loan scheme, according to people familiar with the matter.
The Securities and Exchange Commission is expected to file civil charges as
well. The charges cap a years-long investigation into the alleged abusive
lending practices at Janney Montgomery Scott LLC, Morgan Stanley (MS), Van der
Moolen, and other financial institutions.
(This story and related background material will be available on The Wall
Street Journal Web site, WSJ.com.)
Charles A. Ross, a defense attorney for Andrew Caccioppoli, formerly of Janney
Montgomery, confirmed that his client was arrested Thursday morning and said he
plans to plead not guilty and fight the charges.
The $10 billion stock-lending business has operated largely unnoticed for
years. Its growth is associated with the increase in short selling, a trading
strategy that requires borrowing securities.
The investigation has centered on conduct involving mostly lower-level
employees across Wall Street and related to the use of "finders," or firms that
act as intermediaries and assist borrowers and lenders in locating stock to
borrow, these people said.
The types of alleged schemes that authorities are investigating vary. Under
one such alleged scheme, an individual at a brokerage would divert money to a
family member at a finder shop, a way to artificially inflate the cost of
borrowing. Under another alleged scheme, loans were being passed through several
firms or intermediaries without any purpose other than to drive up the cost of
borrowing the stock, these people said.
Some individuals have reached settlements with the SEC and have pleaded guilty
to criminal charges, these people said. In its settlement with the NYSE, Janney
Montgomery Scott agreed to pay $2.5 million to settle related charges over
allegations that it failed to supervise its stock-loan desk in connection with
improper stock-loan transactions.
-By Paul Davies, The Wall Street Journal; 212-416-4968
(END) Dow Jones Newswires
20-09-07 1522GMT
Copyright (c) 2007 Dow Jones & Company, Inc.
Plus, there was an SEC civil action vs. 38 on the same rap.
