SEC OptionsXpress Case Alleges Sham Trades Hid Illicit Shorting
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Three years of discussions between regulators and OptionsXpress Inc. culminated in a lawsuit yesterday, when the U.S. Securities and Exchange Commission alleged the brokerage helped facilitate illicit short sales.
The company, four executives and a customer violated SEC regulations with sham options trades from October 2008 to March 2010 designed to give the illusion of compliance with short-sale rules, the SEC said. Customers in the OptionsXpress trades accounted for an average of 48 percent of daily volume in one of the targets, Sears Holdings Corp., in January 2010.