Portfolio - Investment Products

Naked or Not? optionsXpress’s Short Selling, Step by Step

by: Tom Steinert-Threlkeld

Thursday, April 19, 2012

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The SEC this week charged online brokerage optionsXpress that specializes in options and futures as well as its former chief financial officer, three other optionsXpress officials and a customer with conducting “an abusive naked short selling scheme.”

optionsXpress, now a subsidiary of Charles Schwab Corp., said its trades were neither novel nor exotic. And not shams, as the SEC contends.

Here is a step by step rundown on how the SEC says the ‘scheme’ executed by optionsXpress, involved ‘naked’ short selling, with failure to deliver the securities involved in the trades.

Then, a step by step rundown of why optionsXpress contends it always delivered on its end of the trades.

Click here to run through the steps.

Securities Technology Monitor