Securities and Exchange Commission
Sunshine Act Meeting.
Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. No. 94-409, that the Securities and Exchange Commission will hold an Open Meeting on Friday, January 15, 2016, at 12:00 p.m., in the Auditorium (L-002) at the Commission’s headquarters building, to hear oral argument in an appeal from an initial decision of an administrative law judge by respondents optionsXpress, Inc. and Jonathan I. Feldman.
On June 7, 2013, the law judge found that optionsXpress violated Rules 204 and 204T of Regulation SHO by relying on buy-writes—that is, purchases of equity securities paired with the simultaneous sale of deep-in-the-money call options representing the same number of shares—to satisfy its delivery and close-out obligations under Rules 204(a) and 204T(a). The initial decision also found that Feldman committed fraud in violation of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rules 10b-5 and 10b-21 by repeatedly placing buy-writes to intentionally avoid his own, distinct delivery obligations. In addition, the initial decision found that optionsXpress caused and aided and abetted Feldman’s antifraud violations.
For these violations, the law judge ordered optionsXpress to cease and desist from violating Rule 204 of Reg. SHO and from causing or aiding and abetting violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rules 10b-5 and 10b-21 and ordered Feldman to cease and desist from violating Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rules 10b-5 and 10b-21. The law judge also ordered that optionsXpress disgorge $1,574,599 and that Feldman disgorge $2,656,377 and imposed civil money penalties of $2,000,000 on optionsXpress and $2,000,000 on Feldman.
Respondents appealed the initial decision’s findings of violations and the sanctions imposed. The issues likely to be considered at oral argument include, among other things, whether optionsXpress violated Reg. SHO; whether Feldman violated the antifraud provisions; and, if so, what sanction, if any, is appropriate in the public interest.
For further information, please contact the Office of the Secretary at (202) 551-5400.
Dated: January 8, 2016