and Merrill Lynch & Co. employees discussed helping naked short-sales by market-maker clients in e-mails the banks sought to keep secret, including one in which a Merrill official told another to ignore compliance rules, said in a court filing.
Lawyers for Overstock, whose California state court lawsuit inSan Francisco was dismissed in January, asked a judge to make public e-mails sent in 2005 and 2006 that it said “reflect business decisions to put profits and corporate ambition over compliance” at Goldman Sachs and Merrill. The banks’ decisions to intentionally fail to deliver Overstock shares caused large- scale naked short selling of the company’s stock, according to the filing.
After a Merrill executive expressed concern that a colleague intentionally failed, or didn’t complete, a short sale, an executive at the clearing unit responded with an expletive, telling the executive to ignore “the compliance area -- procedures, schmecedures,” Overstock lawyers said in the filing, citing an excerpt from a May 2005 e-mail. The Merrill executive later told a judge the statement was a joke, Overstock said in the Feb. 9 court document.
An undated e-mail informed Wolverine Trading LLC, the Goldman Sachs clearing unit’s largest client, that “we will let you fail,” in response to an inquiry by Wolverine about whether there was an effort “at cleaning up” fails, according to the filing.
Barred From Trading
Tags: Goldman Sachs Group Inc, SEC, USA, Procedures, Schmecedures, Merrill executive , Proper Handling, William Halldin, Charlotte, Michael DuVally