Two Brokers Slapped For Alleged Stock Buy-back Scheme
Yesterday the NASD and Chicago Stock Exchange (CHX) suspended and fined two brokers for allegedly manipulating the market price of publicly traded Material Science Corporation (MSC) stock across two markets thereby allowing the issuer to buy back chunks of stock while maintaining compliance with the SEC's safe harbor rule governing stock buy-backs.
While both brokers were able to settle with the regulators without admitting or denying the allegations, the NASD imposed a $25,000 fine and three month suspension against one broker, and the CHX imposed a $20,000 fine and two-month suspension against the other. Neither broker's employing firm was alleged to have known of the buy-back scheme.
Significantly, the cross-investigation and coordination of penalties exhibited by the NASD and CHX, may signal a new era of increased cooperation between regulatory entities and a sign of things to come. For a detailed discussion of this matter go to NASD release www.nasd.com/PressRoom/NewsReleases/2007NewsReleases/NASDW_019043
While both brokers were able to settle with the regulators without admitting or denying the allegations, the NASD imposed a $25,000 fine and three month suspension against one broker, and the CHX imposed a $20,000 fine and two-month suspension against the other. Neither broker's employing firm was alleged to have known of the buy-back scheme.
Significantly, the cross-investigation and coordination of penalties exhibited by the NASD and CHX, may signal a new era of increased cooperation between regulatory entities and a sign of things to come. For a detailed discussion of this matter go to NASD release www.nasd.com/PressRoom/NewsReleases/2007NewsReleases/NASDW_019043
