nasd sued over COCO

Discussion in 'Trading' started by Banjo, Dec 9, 2003.

  1. Banjo


    Just saw on bloomberg tv nasd being sued over COCO fiasco, cool.
  2. Good. Hope they have to pay up some big bucks!

  3. naz could ultimately press for jurisdiction over all ecn's. is that progress or regression?

    Naz waited til EMLX dropped 70ish points before they halted it -- that was a disaster. Seems like this time ARCA did what Naz couldn't...

    Why should trades be broken? Weren't they entered into by willing parties?

    Please, if I am missing something here, clue me in.
  4. once again, the average voter doesn't understand the diff between free and open markets and corporate welfare.

    they are not the same!
  5. Arnie


    (REUTERS) UPDATE 1-Nasdaq sued for canceling Corinthian trades
    UPDATE 1-Nasdaq sued for canceling Corinthian trades

    (Adds byline, updates with Schumer statement, details)
    By Nicole Maestri
    NEW YORK, Dec 9 (Reuters) - Traders sued the Nasdaq Stock
    Market Inc. <NDAQ.OB> Tuesday claiming they lost money when the
    stock market canceled trades of Corinthian Colleges Inc.
    <COCO.O> after its shares plunged 32 percent in only 12 minutes
    on Friday.
    DL Capital Group LLC is seeking to collect for damages it
    said it sustained when Nasdaq halted Corinthian shares for
    trading after the plunge, but then lifted the halt before
    telling investors it would cancel trades that took place in the
    12 minute time frame.
    The lawsuit comes as calls widened on Tuesday for federal
    regulators to conduct a review of the mishap.
    New York Sen. Charles Schumer asked the U.S. Securities and
    Exchange Commission to investigate trading of Corinthian
    shares, saying the SEC "needs to open a probe to figure out
    what went wrong in this case and how to prevent these issues in
    the future."
    Meanwhile, a source told Reuters that a regulatory
    investigation of the entire affair is likely.

    On Friday, shares of Corinthian Colleges, a for-profit
    college operator, sank from $57.45 at 10:46 a.m. EST to $38.97
    in 12 minutes.
    Nasdaq halted trading in the stock for roughly one hour,
    saying an "erroneous trade," in which multiple orders were
    routed to several trading venues by a single customer, prompted
    "extraordinary market activity."
    DL Capital said in its suit that it purchased Corinthian
    shares during the 12 minute period, and then sold its shares
    for a profit shortly after trading resumed.
    But Nasdaq's decision to cancel the earlier trades, which
    it announced after shares were released for trading, left DL
    Capital facing a loss, the suit alleges.
    "Nasdaq did not disclose a critical fact, which was that
    they were going to cancel all the trades," said Sherrie Savett,
    a lawyer with Berger & Montague, representing DL Capital.
    Nasdaq said it had no comment on the lawsuit.
    "If DL Capital had known that its purchase of COCO shares
    would be canceled, it would not have sold those same shares
    after trading resumed -- i.e. it would not have sold shares
    which it did not own," stated the suit, filed Dec. 8 in the
    U.S. District Court of the Southern District of New York.
    Meanwhile, the trading mishap has touched off a regulatory
    tug-of-war between Nasdaq, the No. 2 stock market, and its
    On Monday, Nasdaq filed a request with the SEC seeking
    broader authority to suspend trading across all trading
    platforms of Nasdaq-listed stocks.
    The proposal followed a complaint by the Pacific Exchange
    that Nasdaq had no right to halt trading in Corinthian shares
    for what it called a "systems" problem and not a regulatory
    issue. The Pacific Exchange, which acts as the regulator for
    the Archipelago Exchange, has asked the SEC to probe last
    week's stoppage.
    The lawsuit filed against Nasdaq said it was bringing the
    action on behalf of DL Capital as well as a class, consisting
    of those who traded the common stock between 10:46 a.m. and the
    time Nasdaq announced the cancellation of all trades.
    (Additional reporting by Javier David in New York and Kevin
    Drawbaugh in Washington)
    ((Reporting by Nicole Maestri; editing by Phil Berlowitz;
    Reuters Messaging:;
    (646) 223-6173))
    *** end of story ***
  6. The last thing Nasdaq should get is jurisdiction over all trading venues for nasdaq stock. Nasdaq is not a real stock exchange like the NYSE but a group of marketmakers who set up systems and rules for trading among themselves. Why the f*ck should they have jurisdiction over ECN's? Talk about rewarding someone for their own incompetence.
  7. Tea


    How is this any different than the CME or CBOT busting trades on a spike in the emini or dow mini contracts?

    I wonder why no one sues them?
  8. i dont think its the busting of trades that is the problem that is done all the time. its reopening and then deciding to bust the trades that hurt people and opens them up to being liable for losses.
  9. Don't think CBOT or CME ever halt trading on those 2 occassions.

  10. Tea


    So if I understand this correctly:

    1.) Busting trades - o.k. (CME & CBOT specialty)

    2.) Halting a stock - o.k. (a NYSE specialty)

    3.) Halting a stock and busting trades - lawsuit, not o.k.
    #10     Dec 9, 2003