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Stuart Z. Goldstein
DTCC
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DTCC Corrects Misrepresentations on Naked Short Selling Litigation
New York, January 30, 2006 -The Depository Trust & Clearing Corporation today announced its intention to correct the continuing misrepresentation being put out by third parties on DTCC and naked short selling litigation.
To date, 14 suits have been brought against DTCC or its subsidiaries involving naked short selling. Of these 14 cases, 9 were either dismissed by the courts or withdrawn by the plaintiffs. In 4 cases, suits were filed, but DTCC and its subsidiaries were never served.
In dismissing one case in Nevada brought by Nanopierce Technologies, Inc., Judge Brent Adams wrote, "[S]tate law may not be applied as to impose damages on [DTCC]. To do this would be to forbid Defendants from doing what the SEC authorized them to do."
"We are concerned about the continuing effort by third party groups to mischaracterize and misrepresent the facts surrounding these lawsuits and the degree of concern over this issue," said Larry Thompson, DTCC general counsel and managing director. "From what regulators have said, there is little empirical evidence that widespread abuses such as naked short selling are occurring."
DTCC subsidiaries clear and settle trades. Short selling and naked short selling are trading strategies regulated by the marketplaces and the SEC. DTCC is involved after a trade is completed at the marketplace. DTCC does not have regulatory powers or regulatory responsibility over trading or to forcing the completion of trades that fail. As the SEC has stated, fails can be the result of a wide range of factors.
The SEC has also pointed out that their efforts, in promulgating Reg SHO to effectively safeguard extended fails associated with short selling or naked short selling have been successful in achieving their goal.
A complete list of the cases and their disposition as of today follows:
Cases Filed Against The Depository Trust & Clearing Corporation ("DTCC") and its Affiliates Related to the Issue of Naked Short Selling
| Name of Case | Filed | Disposition | |
|
1. |
Williamson v. Goldman, Sachs & Co., et al. |
January 31, 2003 |
Dismissed by court, March 17, 2004 (as to moving defendants - DTCC Defendants never served) |
|
2. |
Nutek v. Ameritrade, Inc., et al. |
March 21, 2003 |
Dismissed voluntarily by plaintiffs as against DTCC Director Defendants, with prejudice, May 18, 2004. Dismissed as against remaining DTCC Defendants, July 30, 2004 |
|
3. |
Genemax Corp. v. Knight Securities, LP, et al. |
November 14, 2003 |
Dismissed by court, November 9, 2004 (DTCC Defendants not served) |
|
4. |
Capece v. Elgindy, et al. |
April 28, 2004 |
Dismissed voluntarily by plaintiff as against DTCC Defendants, August 3, 2004 |
|
5. |
Nanopierce Technologies, Inc. v. The Depository Trust Co., et al. |
April 29, 2004 |
Dismissed by court on DTCC Defendants' motion to dismiss, April 28, 2005. Appeal pending in Supreme Court of Nevada |
|
6. |
Sporn v. Elgindy, et al. |
August 30, 2004 |
Dismissed by court on DTCC Defendants' motion to dismiss, July 25, 2005. Sanctions awarded in favor of DTCC Defendants |
|
7. |
Walters v. DTCC, et al. |
August 30, 2004 |
Dismissed by court on DTCC Defendants' motion to dismiss (no opposition filed), December 7, 2004 |
|
8. |
Pet Quarters, Inc. v. The Depository Trust & Clearing Corporation, et al. |
October 29, 2004 |
DTCC Defendants' motion to dismiss and plaintiffs' motion to remand to state court pending |
|
9. |
Capece v. DTCC, et al. |
April 29, 2005 |
Dismissed by court on DTCC Defendants' motion, October 11, 2005. |
|
10. |
Whistler Investments, Inc. v. DTCC, et al. |
May 12, 2005 |
DTCC Defendants' motion to dismiss pending (argument to be heard February 6, 2006) |
|
11. |
Miller, as Trustee v. Boston Partners Management LP, et al. |
January, 2006 |
Filed, not served. |
| Related Early Cases | |||
|
1. |
X-Clearing Corporation v. Depository Trust Corporation, et al. (Intergold, Inc. action) |
February 18, 2003 |
Dismissed by court on DTCC Defendants motion to dismiss, October 3, 2003 |
|
2. |
Intergold Corporation v. Depository Trust Corporation, et al. |
March 10, 2003 |
Filed, never served |
|
3. |
X-Clearing Corporation v. Depository Trust Corporation, et al. (Petrogen Corp. action) |
February 25, 2003 |
Dismissed by court on DTCC Defendants' motion to dismiss, September 5, 2003 |
About DTCC
The Depository Trust & Clearing Corporation (DTCC), through its subsidiaries, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter credit and equity derivatives. DTCC's depository also provides custody and asset servicing for more than two million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. DTCC's derivatives services are offered through DTCC Deriv/SERV LLC, a wholly owned subsidiary of DTCC. For more information on DTCC, visit www.dtcc.com.
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