I Heard It Through the Grapevine


John Tudor, former pitcher for the St. Louis Cardinals, once said, “A rumor without a leg to stand on will get around some other way.” But when it comes to the securities markets, the SEC recently proclaimed that if a broker-dealer’s or investment advisor’s lax policies allow a rumor to “get around some other way,” the firm could pay

through an enforcement action.

On July 13, 2008, the SEC announced its intention to conduct immediate examinations to determine whether entities’ supervisory and compliance controls are reasonably designed to prevent potentially manipulative conduct, such as the intentional creation or spreading of false information intended to affect securities prices. Chairman Cox said that “[t]he examinations . . . are aimed at ensuring that investors continue to get reliable, accurate information about public companies in the marketplace.” The examinations will be conducted by the SEC’s Office of Compliance Inspections and Examinations, FINRA, and NYSE Regulation, Inc.

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