A Wisconsin company claims in court that the SEC is withholding evidence
of "a large securities trading fraud ... in the 'high-frequency'
trading industry," and may be doing so to disguise its own incompetence.
In a federal FOIA complaint, EMM Holdings claims the SEC denied its request for "records of consumer complaints, no-action letters, interpretive letters, records compiled in any and all investigations, consumer complaints, and staff comment letters in relation to Quantlab Securities."
It claims the documents will shed light on whether the SEC actually "understands and is competently pursuing malfeasance in the HFT [high-frequency trading] industry."
EMM Holdings is a nonbank holding company, according to its complaint.
The complaint states: "Through other litigation, plaintiff believes it has uncovered
a large securities trading fraud scheme and/or a systematic use of unfair advantages (herein 'malfeasance') by those engaged in the 'high frequency trading' (HFT) industry. Plaintiff believes the global securities markets would be well-served by exposing malfeasance by market participants."
EMM states: "Quantlab Securities is a large HFT enterprise, having reported revenues of over $165 million in 2010 alone. There is reason to believe they have or are engaged in some malfeasance. First, of course, are defendant's acknowledgements that there is an ongoing investigation or proceeding relating to Quantlab Securities. Second, Quantlab Securities and its related companies have been repeatedly fined for submitting faulty Order Audit Trail (OATs) records to the Financial Industry Regulatory Authority (FINRA). These records are exactly what their name describes: a paper trail that allows regulators to re-create a market participant's past actions. By repeatedly submitting faulty reports, it is plausible that Quantlab Securities was engaging in a systematic cover-up of their securities trading patterns to escape regulatory attention. The information sought by plaintiff would corroborate the belief that Quantlab Securities engaged in market malfeasance to make enormous profits. Discovering and exposing such malfeasance is crucial to ensure confidence in the global markets. Further, the sought records will shed light on whether defendant understands and is competently pursuing malfeasance in the HFT industry."
Read more: http://www.courthousenews.com/2012/09/21/50520.htm
In a federal FOIA complaint, EMM Holdings claims the SEC denied its request for "records of consumer complaints, no-action letters, interpretive letters, records compiled in any and all investigations, consumer complaints, and staff comment letters in relation to Quantlab Securities."
It claims the documents will shed light on whether the SEC actually "understands and is competently pursuing malfeasance in the HFT [high-frequency trading] industry."
EMM Holdings is a nonbank holding company, according to its complaint.
The complaint states: "Through other litigation, plaintiff believes it has uncovered
a large securities trading fraud scheme and/or a systematic use of unfair advantages (herein 'malfeasance') by those engaged in the 'high frequency trading' (HFT) industry. Plaintiff believes the global securities markets would be well-served by exposing malfeasance by market participants."
EMM states: "Quantlab Securities is a large HFT enterprise, having reported revenues of over $165 million in 2010 alone. There is reason to believe they have or are engaged in some malfeasance. First, of course, are defendant's acknowledgements that there is an ongoing investigation or proceeding relating to Quantlab Securities. Second, Quantlab Securities and its related companies have been repeatedly fined for submitting faulty Order Audit Trail (OATs) records to the Financial Industry Regulatory Authority (FINRA). These records are exactly what their name describes: a paper trail that allows regulators to re-create a market participant's past actions. By repeatedly submitting faulty reports, it is plausible that Quantlab Securities was engaging in a systematic cover-up of their securities trading patterns to escape regulatory attention. The information sought by plaintiff would corroborate the belief that Quantlab Securities engaged in market malfeasance to make enormous profits. Discovering and exposing such malfeasance is crucial to ensure confidence in the global markets. Further, the sought records will shed light on whether defendant understands and is competently pursuing malfeasance in the HFT industry."
Read more: http://www.courthousenews.com/2012/09/21/50520.htm
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