SECLaw.com - The Securities Law Blog: November 2004

Three AMEX Officials Receive Wells Notices

Written by Mark J. Astarita, Esq. on Friday, November 12, 2004

The NY Times is reporting that the Chairman, the President and the General Counsel of the American Stock Exchange have received Wells Notices from the SEC regarding an investigation into options trading at the firm.

A Wells Notice is a formal notice to potential defendants that the agency is considering filing formal charges, and affords the potential defendant the opportunity to respond and present arguments why the case should not be brought.

The AMEX, which is owned and operated by the NASD has had trouble in its own regulatory compliance in the past, according to the Times. Allegations include attempted coverups by the exchange, and submitting of false reports to the SEC.

These are of course very serious allegations, and very untimely, given the SEC's current discussions to significantly modify, if not eliminate, self regulation. The exchange, and the NASD, needs to clean up its own shop, pronto, if this type of activity is truly occuring at the self-regulatory agencies.

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Merrill vs. UBS - Broker Defections Rattle Firms

Written by Mark J. Astarita, Esq. on Friday, November 12, 2004

The New York Times > Business > Market Place: From Broker's Defection, Struggle of Loyalties

The NY Times has an interesting piece on the battle over a broker defection. It seems that the UBS and Merrill Lynch "protocol" which gave promise to the concept of allowing brokers to change firms without litigation may be short lived.

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SEC Investigates Wirehouses for Best Execution Violations

Written by Mark J. Astarita, Esq. on Tuesday, November 09, 2004

The SEC is stepping up its problem of at least 12 firms including Merrill Lynch & Co. and Charles Schwab Corp., examining whether the brokers profited at customers' expense when trading Nasdaq stocks. The SEC is apparently investigating whether the firms obtained the best price for their customers.

According to press reports, the issue came to light during SEC audits, the SEC found that the brokers may have failed to obtain the best prices for customer trades in cases where the brokerages either ``internalized'' orders or were paid to route their orders to other firms.

Keep an eye on this investigation. With Spitzer upstaging the SEC at every turn, the SEC needs something to demonstrate to its handlers and the public that it is actually doing something, and this one might just be the ticket...whether it is true or meritorious, or not

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Is the SEC Responsible for a Vaccine Shortage?

Written by Mark J. Astarita, Esq. on Tuesday, November 09, 2004

Yahoo! News - SEC 'glitch' hampers child vaccine

Just when you thought that everything wrong with the world had been blamed on the SEC, here comes a new one. The CDC is blaming the SEC for a shortage of vaccines for our nation's children.

According to the USAToday article, SEC accounting rules prevent companies from recognizing sales as revenue until the customer takes delivery of the product. The unintended effect of the regulation is that drug companies cannot provide a stockpile of vaccine, since they cannot recognize income from stockpiles held in factories.

It is all very complicated, since vaccines expire and production has to be managed carefully, and it is all the SEC's fault.

Next we will be hearing that the problems with Vioxx were caused by the Transportation Safety Administration.

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