SEC charges trader with market abuse

David Benyon
25 Apr 2008

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Regulation

WASHINGTON, DC – Only weeks after rumours of market abuse surrounded the near collapse of Bear Stearns, US regulator the Securities and Exchange Commission (SEC) has charged a trader with spreading false rumours.

Paul Berliner, a trader for the Schottenfeld group, is charged with spreading false rumours on November 29, 2007. Instant messaging between his trader friends spread the rumour that Blackstone was considering lowering its price for its takeover of Alliance Data Systems (ADS). Blackstone had agreed to acquire ADS for $6.4 billion six months earlier. The false rumours said Blackstone’s initial offer of $81.75 per share would be reduced to $70 due to problems in ADS’ consumer banking division. The rumours reduced ADS’ stock by 17% noon that day.

Berliner has agreed to settle without admitting or denying the SEC allegations. He is required to pay a $130,000 fine and surrender $26,129 made in profits and interest. He is also barred by an SEC order from any association with a broker or dealer.

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