Our mob connection told us the foundation of Wall Street racketeering stood on 3 pillars: short-selling, dancing around customer orders, and gangbanging prices by deploying the full resources of all the Crime Families together, and all at once, in coordinated crippling attacks on victimized issues, market segments, whole markets sometimes, and, lately, the entire civilized world and Iceland.
Loyal readers will recall that this Capo had close matrimonial ties to our mother, who was a Saint.
Yesterday, the Securities and Excuses Commission issued the press release shown below. While we cannot recall our regulatory hotshots ever addressing Pillar Number 2 before, this one effort hardly makes up for almost 8 decades of flagrant cheerleading along the sidelines of this sociopathic industry, and should appropriate Government action actually continue, any semblance of praise for the psychotic Agency from our blogger is likely to get buried in the midst of one of his more lengthy and convoluted passages within the kind of Byzantine literary effort readers inevitably encounter in these pages whenever such a situation arises, and we rush to note that the fine here is at least several hundred billion dollars under any reasonable penalty, given the billions upon billions in current dollar (inflation-adjusted) year-end bonuses that Family racketeers have piled up waltzing their customers around since their rigged market system first began plundering our orders two freaking centuries before this one.
SEC Charges Merrill Lynch for Misusing Customer Order Information and Charging Undisclosed Trading Fees
Washington, D.C., Jan. 25, 2011 — The Securities and Exchange Commission today charged Merrill Lynch, Pierce, Fenner & Smith Incorporated with securities fraud for misusing customer order information to place proprietary trades for the firm and for charging customers undisclosed trading fees.
To settle the SEC's charges, Merrill has agreed to pay a $10 million penalty and consent to a cease-and-desist order.
"Investors have the right to expect that their brokers won't misuse their order information," said Scott W. Friestad, Associate Director in the SEC's Division of Enforcement. "The conduct here was clearly inappropriate. Merrill's proprietary traders had improper access to information about the firm's customer orders, and misused it to place trades on the firm's behalf."
The SEC's order found that Merrill operated a proprietary trading desk between 2003 and 2005 that was known as the Equity Strategy Desk (ESD), which traded securities solely for the firm's own benefit and had no role in executing customer orders. The ESD was located on Merrill's main equity trading floor in New York City, where traders on Merrill's market making desk received and executed customer orders. While Merrill represented to customers that their order information would be maintained on a strict need-to-know basis, the firm's ESD traders obtained information about institutional customer orders from traders on the market making desk. They then used it to place trades on Merrill's behalf after executing the customers' trades. In doing so, Merrill misused this information and acted contrary to its representations to customers.
The SEC's order also found that, between 2002 and 2007, Merrill had agreements with certain institutional and high net worth customers that Merrill would only charge a commission equivalent for executing riskless principal trades. However, in some instances, Merrill also charged customers undisclosed mark-ups and mark-downs by filling customer orders at prices less favorable to the customer than the prices at which Merrill purchased or sold the securities in the market.
"Charging these undisclosed mark-ups and mark-downs was improper and contrary to Merrill's agreements with its customers," said Robert B. Kaplan, Co-Chief of the SEC's Asset Management Unit. "Brokers must act honestly and transparently when charging fees to their customers. There is no place in our markets for charging investors undisclosed trading fees."
Without admitting or denying the SEC's findings, Merrill consented to the entry of a Commission order that censures Merrill, requires it to cease-and-desist from committing or causing any violations and any future violations of Sections 15(c)(1)(A), 15(g), and 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3(a)(6) thereunder, and orders it to pay a penalty of $10 million.
Sounds to us like our regulatory hotshots are considering the episode an isolated incident, not Racketeering Pillar Number 2, and shutting their efforts down. Was this action merely the inevitable result of a complaint? Does the SEC even bother to audit order flow to study proprietary trading? The wording here suggests the Agency never takes proactive steps to address widespread criminal activity, more concerned with placing a lid on its investigative process to insure that G-men never dip below the tip of an obvious iceburg, no matter how humongeous its potentially gargantuan size would certainly turn out to be.
Is this it? What, are you kidding me?
And when do we start locking these serial pickpockets up?
