SEC checks Corinthian Colleges halt
Nasdaq requests trading authority over Archipelago
By Steve Gelsi, CBS.MarketWatch.com
Last Update: 3:25 PM ET Dec. 10, 2003
NEW YORK (CBS.MW) -- The U.S. Securities and Exchange Commission said Wednesday it is examining recent trading in Corinthian Colleges as pressure builds to address the fragmented stock trading system for Nasdaq stocks.
Last Friday's transactions in shares of the education firm (COCO: news, chart, profile) marked the latest in an ongoing regulatory issue over the power of the Nasdaq to halt trades on stocks that change hands outside its platform, including electronic communications networks and rival exchanges such as the PacEx and Archipelago.
SEC spokesman John Nester said the commission is looking into the Corinthian matter. He declined to comment further.
Corinthian stock fell 32 percent within 12 minutes last Friday, prompting a halt by the Nasdaq. Trading resumed on Archipelago before the Nasdaq's halt was lifted. The Nasdaq also canceled 3,570 trades on the stock.
In a statement late Friday, Nasdaq said the drop was triggered by a single seller routing many orders through different markets and electronic platforms.
On Monday, the Nasdaq filed a request with the Securities and Exchange Commission to obtain broader authority to suspend trading across all trading platforms.
Meanwhile, the Pacific Exchange, the regulatory body for Archipelago, is readying a letter to the SEC, a spokesman for the exchange said Wednesday. The PacEx has said that the Nasdaq halt amounted to a "systems" problem and not a regulatory matter.
A spokeswoman from Santa Ana, Calif.-based Corinthian declined to comment Wednesday. The company issues a statement on Dec. 5 saying it did not know of any events or activities that would warrant any concern for the company's performance.
Sen. Charles Schumer, D-N.Y., also weighed in on the trade, saying it reflects "unclear regulatory standards" and "weaknesses in computer trading."
The incident has also prompted traders to sue the Nasdaq.
The Nasdaq maintains that the SEC gave it the authority last year to halt trading on stocks across trading platform, but the agency also said it would be up to a committee involving all exchanges to determine more specific guidelines.
Steve Gelsi is a reporter for CBS.MarketWatch.com in New York. |
