.=DJ U.S Regulators Told No Illegal Trades At BERLIN Exchange
By Carol S. REMOND
Of Dow Jones Newswires
NEW YORK (Dow Jones)--Officials from the Berlin-Bremen Stock Exchange assured
U.S. securities regulators Friday that no illegal trading of U.S. stocks is
taking place on that exchange.
Representatives from the Securities and Exchange Commission and the NASD had
requested a meeting following complaints by some U.S. companies of their stocks
being manipulated on the BERLIN exchange.
A spokeswoman for the BERLIN exchange said in an email message that during the
meeting, also attended by GERMAN securities regulators, the rules governing the
BERLIN Stock Exchange were explained to U.S. regulators. "We clearly stated that
no short selling was executed on the BERLIN Stock Exchange and (that) there will
not be any," the spokeswoman said.
Some development stage companies have complained that their shares were listed
on the BERLIN exchange without their knowledge or permission. Some also said
that the listings, most of which were sponsored by a brokerage firm called
Berliner Freiverkehr AG, were designed to circumvent tougher short selling rules
enacted by the NASD earlier this year. Most of these companies have shares that
trade on the Over-The-Counter Bulletin Board.
"My impression is that this informal meeting was helpful to both sides to
better understand what is going on," said Holger Timm, founder and chief
executive officer of Berliner Freiverkehr, who also attended the meeting.
In a telephone interview, Timm reiterated that no illegal short selling has
been taking place on the BERLIN Exchange. "This has nothing to do with new
(NASD) regulations," he said. Rather Timm said, the listing of OTCBB companies
on the BERLIN exchange is designed to make it easier for GERMAN investors to
trade these stocks.
The NASD in April toughened rules governing short selling of U.S. stocks,
extending its affirmative determination rule to non-NASD members such as
specialists, option markets and foreign brokers.
The affirmative determination rule stipulates that brokers and dealers engaged
in a short sale transaction must make sure that shares can be delivered by
settlement time, three days later. Bona fide market making transactions and bona
fide intermarket arbitrage transactions are exempt for such requirement.
A short seller typically borrows stock from a broker to sell it into the
market, betting that the share price will fall so that he can buy the stock back
at a lower price and pocket the difference.
Development stage companies in the U.S. have traditionally sought out listings
on foreign exchanges, and even paid to secure them, to promote their businesses
and secure much needed financing by selling shares to foreign investors in
private placements which are often less regulated abroad than in the U.S.
Spokespeople for the SEC and NASD declined to comment.
-By Carol S. REMOND; Dow Jones Newswires; 201 938 2074; carol.REMOND@dowjones
com
(END) Dow Jones Newswires
04-06-04 1820GMT |
