NASD probing brokers "spoofing" stock prices
WASHINGTON, Aug 23 (Reuters) - The National Association of Securities Dealers Inc. said on Thursday it is looking into 11 brokers who may have
tried to manipulate stock prices by submitting false quotes only to cancel them moments later.
Recently, lawmakers and regulators have raised concerns with the practice, which is known as
``spoofing'' and is used in thinly traded stocks in various securities, including options.
NASD Regulation, the regulatory arm of NASD, is currently investigating 11 such cases and has referred 21 cases to the U.S.
Securities and Exchange Commission since 1997, NASD Regulation president Mary Schapiro recently said in a letter to U.S. Rep.
John Dingell, a Michigan Democrat.
Two cases were referred to the SEC in May, she said in the June 10 letter. A spokesman for the SEC declined to comment on the
cases.
``NASDR continues to be vigilant in its detection of market manipulation in its varied forms,'' Shapiro said.
Dingell has asked NASD and the SEC to provide him with updates every six months on their surveillance of spoofing, which involves
the display and prompt withdrawal of a large quote order with the aim of benefiting from moving prices.
Dingell is the ranking Democrat on the U.S. House Energy and Commerce Committee.
Shapiro said NASD, which partially owns the Nasdaq stock market, has stepped up its surveillance of spoofing and expects to finish testing a system by the end of this summer.
In May, the SEC settled a cease-and-desist order against an individual investor accused of spoofing. The case was one NASD had referred, Schapiro said. |
