One more rat caught with his hands in the cookie jar..read on...
NASD Suspends and Sanctions Trader for Marking the Close; Issues Cautionary Note
/FROM PR NEWSWIRE WASHINGTON DC 202-347-5155/
TO BUSINESS EDITOR:
NASD Suspends and Sanctions Trader for Marking the Close;
Issues Cautionary Note Prior to Russell 2000 Rebalance
WASHINGTON, June 26 /PRNewswire/ -- NASD today announced that it suspended
Alan M. Remer for four months for market manipulation by "marking the close"
on three separate occasions. Remer was also fined $7,500.
"Marking the close" is a form of market manipulation. The practice
involves attempting to influence the closing price of a security by executing
purchase or sale orders at or near the close of normal trading hours. Such
activity can artificially inflate or depress the closing price for the
security and can affect price of "market-on-close" orders. On three
occasions, Remer received a market-on-close sell order that required him to
purchase a block-sized order of a security at the price of the last trade
executed during normal business hours. In each instance, Remer executed the
last trade himself and did so at an artificially low price. As a result,
Remer was able to purchase the market-on-close block from his customer at the
artificially low price established by his last trade.
Effects on Index Rebalancing
The practice of "marking the close" will have a disproportionately adverse
impact when it occurs on an expiration Friday or on an index rebalancing day,
such as the Russell 2000 Index rebalancing, which takes place on June 28,
2002. On rebalancing days, securities are added to and deleted from an index.
Market makers often receive large market-on-close orders on expiration Fridays
and rebalancing days as customers adjust their portfolios to reflect the
expiration of options, index options, futures and the rebalanced index.
Accurate pricing at and around the market's close on index rebalancing days is
critically important to a fair and orderly rebalancing process.
NASD always monitors for manipulative activity and will be scrutinizing
market activity on June 28, 2002 for improper attempts to influence closing
prices.
Investors can obtain more information about NASD as well as the
disciplinary record of any NASD-registered broker or brokerage firm by calling
800-289-9999, or by sending an e-mail through one of NASD's Web Sites,
nasdr.com .
NASD is the leading private-sector provider of financial regulatory
services, dedicated to bringing integrity to the markets and confidence to
investors through effective and efficient regulation and complementary
compliance and technology-based services. NASD touches virtually every aspect
of the securities business -- from registering and educating all industry
participants, to examining securities firms, enforcing both NASD rules and the
federal securities laws, and administering the largest dispute resolution
forum for investors and member firms. For more information, please visit the
Web Site at nasd.com .
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