SEC accuses two people of blank trading “meme shares” – Corporate / Commercial law

In a Complaint filed with the US District Court for the District of New Jersey, the SEC alleged that two people placed orders on either side of the market for the same put options using two accounts with two brokers. The SEC clarified that one of the brokers transferred the “make” discount to clients when placing a sell order, while the other did not pass on the “take” fee when placing a. purchase order. The SEC said the scheme allowed the two people to collect the “make” rebate in one account and avoid the “take” charge in the other, and that the people again took advantage of the scheme by reversing the transaction. to collect additional discounts. As a result, the SEC determined that one of the people executed about 11,430 washing transactions and received about $ 1.4 million in rebates, to make a profit of at least $ 668,671, and the other no one executed approximately 2,360 washing transactions, resulting in $ 174,000 in rebates, making a profit of at least $ 51,334.

SEC Charged Individuals with Section 17 (a) Violations(1) and (2) of the Securities Act, section 10b) of the law on foreign exchange and SEA Rule 10b-5 (“Use of manipulative and deceptive devices”) below.

The SEC seeks against the individuals (i) permanent injunctions, (ii) restitution with pre-judgment interest and (iii) civil monetary penalties. The SEC said the individual who made the smallest profit has already settled the charges by agreeing to (i) an injunction, (ii) pay restitution in the amount of $ 51,334, with pre-judgment interest of $ 515 , and (iii) pay a civil fine of $ 25,000 monetary penalty.

Primary sources

1. SEC Press Release: SEC Charges Two People Over Wash-Out Trading Program Involving “Even Stock” Options
2. SEC Complaint: Suyun Gu and Yong Lee

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