U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21032 / May 11, 2009
Securities and Exchange Commission v. Robert Todd Beardsley and George Lindenberg, United States District Court for the Southern District of New York, Civil Action No. 08-cv-10054 (LBS)
Day-Trader Settles SEC Charges of Manipulative Short Selling
The Securities and Exchange Commission announced that on May 4, 2009, the Honorable Leonard B. Sands of the United States District Court for the Southern District of New York, entered a Final Judgment of permanent injunction and other relief against Robert Todd Beardsley, who was charged with perpetrating a manipulative short selling scheme through brokerage accounts at the now defunct broker-dealer, Redwood Trading, LLC. The Final Judgment settles the Commission's claims against Beardsley that were asserted in a civil action filed on November 19, 2008.
The Commission's complaint alleged that Beardsley devised a scheme by which he routinely executed short sales in numerous stocks while the prices of those stocks were declining, in violation of the since-rescinded "uptick rule." As part of the alleged scheme, Beardsley also failed to mark orders as short sales in order to create the false appearance that the orders were long. The complaint charged Beardsley with having violated the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 ("Securities Act"), and Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5, and provisions relating to short sales of securities, Section 10(a)(1) of the Exchange Act and former Exchange Act Rule 10a-1 (the "uptick rule").
Without admitting or denying the allegations in the complaint, Beardsley has consented to the entry of a final judgment that permanently enjoins him from committing future violations of the above-referenced provisions (except former Rule 10a-1, which no longer is in effect), and based on Beardsley's sworn representations in his Statement of Financial Condition, orders him to pay partial disgorgement of $100,000, and does not impose a civil penalty.
For additional information, please see Litigation Release No. 20814A (November 19, 2008).