SEC Charges Two Individuals for Wash Trading Scheme Involving Options of ‘Meme Stocks’

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Okay great job SEC. Now its time to move on to the real criminals at citadel and robbinghood

Expert-Honeydew1589

This is what they have been spending their time doing…

BollockSnot

> The Securities and Exchange Commission today charged a Florida resident and his friend for engaging in a fraudulent scheme designed to collect liquidity rebates from exchanges by wash trading put options of certain “meme stocks” in early 2021.

>According to the SEC’s complaint, filed in the United States District Court for the District of New Jersey, starting in late February 2021, Suyun Gu became aware of the increased market volume and volatility driven by so-called “meme stocks” – stocks that were being actively promoted on social media platforms. Gu allegedly then devised a scheme to take advantage of the “maker-taker” program offered by exchanges by trading options of these stocks with himself.

> Under the maker-taker program, a trade order that is sent to an exchange and executes against a subsequently received order makes liquidity and generates a rebate from the exchange. In contrast, an order that immediately executes against a pre-existing order takes liquidity and is charged a fee.

> The SEC’s complaint alleges that Gu was able to generate illicit profits by using broker-dealer accounts that passed rebates back to their customers to place initial orders on one side of the market, and then using broker-dealer accounts that did not charge fees for taking liquidity for his subsequent orders on the other side of the market. When identifying a product to trade, Gu and his friend and business associate, Yong Lee, selected far out-of-the-money put options on some “meme stocks,” which they thought would be easier to trade against themselves because interest in buying the “meme stocks” and related price increases would make put options on those stocks less attractive.

>After certain broker-dealers closed Gu’s and Lee’s accounts in early March 2021, Gu was able to continue the scheme through mid-April 2021 by lying to broker-dealers about his trading strategy, using accounts in the names of other people, and accessing these accounts through virtual private networks to hide his activity. The complaint alleges that Gu executed approximately 11,400 trades with himself, netting at least $668,671 in liquidity-rebates, and that Lee executed approximately 2,300 trades with himself, netting $51,334 in liquidity-rebates

16431879196842

The SEC is a bludgeoning tool for the rich

lax_street

Yet citidel goes unpunished

MiracleMex714

A new generation of climate fintech startups

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As concern about climate patterns has grown over the past year, so too have the number of fintechs offering various ways for consumers to reduce and mitigate their carbon footprint. At the same time, traditional banks and credit card companies are also pivoting to retain and capture customers who want to invest their money in institutions that are helping solve rather than exacerbate climate change. Even Visa and Mastercard are rolling out ways to help consumers calculate and offset their impact.

Aspiration is also riding the wave of growing interest in climate-focused fintech companies, with its revenue growing 700% over the past year and its customer base doubling to more than 5 million, according to data provided by the company. On the consumer side, it offers pay-what-you-want savings accounts and investment vehicles with a pledge not to invest in fossil fuels. The bulk of its revenue, however, comes from helping corporations offset their carbon footprint. In August, Aspiration announced plans to go public through a special purpose acquisition company (SPAC) merger that values it at $2.3 billion and will make it the first sustainability-focused consumer financial services provider in the public markets.

Cherny said his personal pivot from politics to finance was driven by the belief that to address climate change, one must follow the money.

“Banks are the primary drivers of the climate crisis,” he said. “These banks aren’t using their money, they’re using our money. Every time we deposit money into one of these big banks, we are literally writing the death sentence of life as we know it on this planet.”

In the half-decade since the adoption of the Paris Agreement, the world’s largest banks have invested $3.8 trillion in fossil fuel projects, according to Banking on Climate Chaos, a report from a global alliance of nonprofits. Topping the list of investors are JPMorgan Chase, Citibank, Wells Fargo, Bank of America, and RBC. Barclays, despite recent commitments to disclose its greenhouse gas emissions and to invest in climate fintech solutions, ranked highest among European banks for its fossil fuel investments.

The road to an IPO

Unlike most traditional banks, Aspiration has committed to never investing consumer deposits in fossil fuels, weapons manufacturing, or private prisons. Aspiration also offsets all gas purchases for its debit card customers; rewards spending with members of its Conscience Coalition of sustainability-minded companies; rounds up purchases to invest in planting trees; and scores customers based on the climate impact of their purchases to incentivize shifts in behavior. The Certified B Corporation plans to launch a credit card that rewards customers for sustainable purchases and automatically offsets their carbon footprint.

“We’ve really created the category of sustainability-focused consumer financial products,” Cherny said.

The SPAC deal with InterPrivate III Financial Partners gives it $400 million in cash to expand its market beyond the United States as well as add services for consumers and business customers alike.

Though it is better known for its consumer offerings, Aspiration currently makes most of its revenue from its work with companies on carbon offsetting projects, such as a recent partnership with home developer Neu to offset the carbon footprint of construction for 5,000 smart, sustainable homes outside Austin. Aspiration’s varied business initiatives are united by a common focus on sustainability.

As Cherny put it in a recent town hall, the company is “pioneering sustainability as a service.”

That particular focus sets Aspiration apart from its consumer-facing rivals, and it makes sense from a business standpoint as more companies seek out partners that can help them attain ESG goals, according to James Ledbetter, editor and publisher of FIN, a newsletter about fintechs.

“They are using their customer base to leverage really good deals in the corporate ESG provision space,” Ledbetter said. “I can’t think of another company that combines those two things.”

The timing for Aspiration’s IPO is ideal given the recent surge of interest in sustainability. Companies that track and mitigate carbon are seeing record investment. And while consumers are increasingly concerned about climate issues, many don’t know what to do about it.

“From a marketing standpoint, you’ve got people where you want them: They’re both feeling anxious and a little powerless,” Ledbetter said. “These companies provide a very easily accessible way to address that concern.”

Greater competition

Climate fintechs remain a small niche within the world of fintechs, but they are rapidly growing and could have an outsize impact on the world of banking by prodding traditional banks to act, according to Alaina Sparks, who leads Deloitte’s U.S. fintech practice.

They fit within a broader trend among fintechs in offering hyper-personalized services to customers with a niche interest—similar to how credit card companies tailor their products and rewards for frequent fliers or Costco shoppers.

In the case of climate fintechs, the focus is on people who are concerned about their carbon impact and want to do something about it—which Sparks acknowledged can be a difficult demographic to pin down. But it’s also a customer base that has the potential to expand rapidly, particularly if climate disasters increase.

“There’s significant opportunity in the space,” Sparks said. “While they are certainly niche players at the moment, we are expecting to see them play a much more significant role going forward.”

Cherny said the average Aspiration customer is in his or her thirties, but that otherwise there is no specific trait such as geography or income level that sets these consumers apart from the public at large.

“They represent more of a psychographic than a demographic,” he noted. “A lot of people who are signing up are in their twenties and thirties and have been watching for decades as the government and business have not done what they need to do. They believe they have a personal responsibility to do what they can.”

As the number of people who fit that profile grows, many competitors have emerged. Some offer their own take on how to battle the climate crisis. Cushon offers net-zero pensions; Trine and Raise Green are crowdfunding platforms that support sustainability projects; Treecard offers a wooden Mastercard and invests 80% of profits in reforestation and climate investments; and Joro helps customers reduce their carbon emissions through tracking and community-based challenges like going vegan for a week.

On the business-to-business side, the payment platform Stripe has launched Stripe Climate, a way for its small-business customers to reinvest revenue in carbon removal projects.

More direct competitors to Aspiration are also emerging. In September, Carbon Zero Financial launched with an app that measures the carbon impact of users’ credit card spending. The company plans to launch its own credit card next year with a feature that automatically neutralizes carbon impact—just as Aspiration aims to do.

Atmos, which launched in January, offers fee-free banking accounts with a pledge to invest in clean energy assets.

“Aligning your money is the single easiest thing you can do because it’s passive, and it’s among the most impactful things you can do,” said cofounder Peter Hellwig.

Despite entering an increasingly crowded field, Hellwig sees plenty of room for Atmos. He predicts climate-related solutions will be the fastest growing segment of banking in the coming decades. He also said that many existing solutions are more marketing than substance and that the market is ripe for a data-driven alternative.

“Tree-planting programs are just sort of a marketing campaign. Our answer to greenwashing is to measure the carbon impact of your money,” he said. Some conservationists say the popularity of planting trees to offset carbon is problematic because such programs can easily fail to realize promised results if they are not planned properly or with broader ecosystems in mind.

Traditional banks are also taking notice of the rapid rise in climate-focused fintechs, with many pledging to track and disclose the emissions of their loan and investment portfolios by adopting the Partnership for Carbon Accounting Financials (PCAF) reporting standard. Morgan Stanley, Barclays, BlackRock, Deutsche Bank, and HSBC all recently joined the initiative, and members of the Global Alliance for Banking on Values (GABV), a separate coalition of banks, have also committed to the PCAF approach.

BishopJaeger

Anyone have the whole text?

phantomtatum

SoftBank backs Steven Mnuchin’s $2.5 bln private equity fund

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He looks like evil bizaro John Oliver

GottaKeepGoGoGoing

Remind me why this human piece of shit was given a position as secretary of the treasury

cringleyy

What a great public servant he is, I’m sure his being Treas Sec had nothing to do with his career aspirations after

nafrotag

That guy is not going to be prosecuted?

none4none

This couldn’t be some sort of fit for tat of course /s

OccamsPhasers

Evergrande: A Deep Dive (Part 1)

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My TL;DR – Evergrande is not your traditional (equity) Ponzi scheme. It was a debt Ponzi scheme, continually borrowing to build and build properties, many of which could not be sold. It had so much capitalised interest it never had positive FCF since it was listed in 2009.

Paraprosdokian7

I have a thought but I am not a market expert so if this is dumb don’t hit me too hard.

I’ve been reading about Evergrande and the potential to affect China like 2008 in the US. I’m curious is China’s rush to ban Crypto’s a way to slow down the devaluation of the Yuan?

One reason comes to mind is this limits Chinese companies from moving from the Yuan to Bitcoin for an example.

SirGidrev

Well to your question, in the model, the money to “repay” the borrowing for the first house will come when the last house is completed and delivered. They simply don’t borrow to start another house during the last construction phase, turn off the lights at corporate HQ, and close up shop. In practice, they never intended for that happen, so it wasn’t a problem.

I don’t think the model of pre-selling houses under construction is itself an issue, except that they kept building and borrowing on a theory of ever-increasing property prices and ever-increasing scale of the business. The government has become worried about overbuilding and property prices, so they’ve turned off the financing spigot, and now Evergrande is done. Which I think you explain well enough at the end.

The conclusion too gives some insight into what regulators will do with Evergrande: they’ll try for an orderly running-down of the asset base, which is going to include some fairly substantial emergency liquidity provisioning from the PBoC.

It’s unrelated, but is there a reason you build your financial models with the most current year in the leftmost column? I’ve never seen anyone else do that.

J-Fred-Mugging

Great article doing the heavy-lifting to show the obvious.

The “just keep building” mentality runs deep in Communist cultures, is anybody surprised the money finally ran out?

GTFonMF

Nicely done!

HaywardUCuddleme

Evergrande ≠ Lehman | Financial Times

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It’s amazing how this story was all over my feed for days and now it’s almost completely vanished from the conversation.

vid_icarus

I’m so happy Evergrande was able to pay $38mil in interest on $300bil in debt yesterday but can they pay the $80mil due tomorrow? What about the week after?

Blackout38

Ya if big biz is l trying to convince you everything is fine then you should probably run

cardboardboxcarracer

Domestic ripples in China could be material for foreign businesses reliant for growth from the Chinese market.

1.7m households have put up to a 50% deposit for a property not built or completed yet by Evergrande. That could be a lot of savings and perceived wealth that could vanish or at best be devalued.

This could trigger the middle class to reduce their consumer spend. I can see Tesla being affected and the prospective EV buyers shifting their spend to more affordable Chinese EV like Xpeng. Same could happen for luxury goods.

navicitizen

Remindme! 1 week

Western_Resort

Lebanon’s annual inflation rate is now the highest in the world; surpassing Venezuela and Zimbabwe

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can someone TL;DR me? how did this happen in the case of Lebanon?

nickbuch

Incoming cryptards saying this could’ve been avoided if the country just used Bitcoin or any of the other countless online currencies.

Plebian_o_console

Anyone else notice the DeMar DeRozan Toronto Raptors T-shirt?

GrinReddit

This could have been avoided if they used Bitcoin!

stalin

I hate this world sometimes

pizza99pizza99

Congress Is Locked In A Familiar Standoff That Could Have Big Economic Consequences

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why is everyone treating this like it isnt serious? its all political grandstanding until it isn’t.

dogfucking69

Here are the reasons why some of you need to worry here

1. The political parties have grown more polarized from each other
2. Debt ceiling increases are subject to the filibuster, which requires no more than statement “i would like to filibuster this bill” and a 60 vote threshold.
3. Pelosi stated that anything having to do with raising the debt ceiling will not be in the budget reconciliation, which only needs a simple majority
4. Some Democrats, like Manchin, are opposed to raising the debt ceiling.

yinyang_yo_

>Elshami, who is now the policy director at the lobbying firm Brownstein Hyatt Farber Schreck, says both parties should have learned the lesson that even the threat of a default can seriously harm the economy. Democrats voted to increase the borrowing cap under President Trump even as the debt ballooned when Republicans approved costly tax cuts and partisan spending priorities. Democrats have said Republicans need to take ownership of the debt they helped create — both through partisan legislation and when Congress voted for bipartisan COVID relief spending under Trump.

Pessimist2020

Republicans managed a lot more with their majority. In cases of simple majority, the Democrats control both House and Senate…use it.

aboutelleon

So basically a gaggle of depends wearers and their wet nurses are all up in arms about how they should spend our money on incompetence and reap rewards from their CEOs while we wait in our deteriorating and cannibalizing society?

ReverseMoses