Fraudulent Trading the Uptick Rule

Short selling using the uptick rule is a practice that landed one Texas man in a lot of hot water. George Lindenberg of Austin, Texas is putting this case behind him.

The rule in question, called the uptick rule is a securities trading regulation to control short selling in financial markets. While it is a legal practice brought into effect in 1938, it was designed to stop bear raids. “This practice was actually halted in 2007 after the Securities Commission (SEC) concluded a long study on it,” outlined Dan Wannamaker of Wannamaker Law in Houston, Texas. Despite the fact that the rule was scrapped in 2007, the SEC claims it is facing calls for its reinstatement to prevent situations such as this from happening.

It so happens that George Lindenberg and another day-trader were charged with manipulative short selling through brokerage accounts at the former Redwood Trading LLC. They frequently sold short securites intending to artificially depress the share prices of sold stock so they could cover their short positions at a good price.

To get a better understanding of short selling, it is necessary to comprehend the mechanism. It is the practice of selling a financial instrument that does not belong to the seller when it is sold. It is sold short with the intentions of buying it at a lower price. In the meantime, the sellers attempt to make a profit from the drop in price of the financial instrument.The opposite of selling short is “going-long” and that happens when, “an investment is bought with the anticipation the price will rise,” stated Wannamaker.

As part of this short trading scheme, Lindenberg and his collaborative partner did not mark the orders when they placed them, which was intended to allow others to think they were long orders. Evidently this was all made possible with the use of trading software that was once used by Redwood Trading. Court records show the scheme was a particularly lucrative one and netted roughly $2,400,000 in illegal sales in less than a year.

Thanks to the superb legal representation by Dan Wannamaker of Wannamaker & Associates, in Austin, Texas, Lindenberg was ordered to pay a partial repayment of $65,000.00 without admitting or denying the charges.

When faced with serious allegations such as this, make sure to consult with a highly experienced board certified criminal defense attorney. It’s a worthwhile investment.

To learn more, visit http://www.wannamakerlaw.com.

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