"Marking the close" is illegal market manipulation where traders attempt to influence the closing price of a security by executing trades at or near the market close. This can create a false impression of the security's value.
Here are some examples of convictions involving "marking the close":
1. SEC v. Joseph Jiampietro
In 2018, the U.S. Securities and Exchange Commission (SEC) charged former Goldman Sachs trader Joseph Jiampietro for manipulating the closing prices of multiple stocks. Jiampietro was accused of placing large orders in the last few minutes of trading to influence the closing prices of stocks, which in turn would benefit his trading positions. The SEC claimed that Jiampietro's actions were intended to mislead the market by artificially inflating the stock prices at the close.
2. SEC v. Alan James Bond
In 2016, the SEC charged hedge fund manager Alan James Bond with marking the close. Bond was accused of manipulating the closing prices of stocks in his fund’s portfolio to inflate the reported net asset value (NAV) of the fund. He allegedly placed orders in thinly traded stocks to push their prices higher, enhancing the fund’s apparent performance and misleading investors about the fund’s success.
3. FINRA v. Morgan Stanley
In 2012, the Financial Industry Regulatory Authority (FINRA) fined Morgan Stanley & Co. LLC for supervisory failures related to marking the close. Morgan Stanley traders were found to have placed numerous trades in the last two minutes of the trading day to manipulate the closing prices of certain stocks. This action was taken to benefit their proprietary positions and violated market integrity rules.
4. SEC v. Zannino
In 2011, the SEC charged trader Nicholas Zannino with marking the close. Zannino, while working at a brokerage firm, was alleged to have engaged in a scheme to manipulate the closing prices of stocks by placing multiple buy or sell orders just before the market close. His intention was to affect the stock's closing price to benefit his and his clients' positions, which is considered illegal under SEC rules.
5. SEC v. Galleon Management
The SEC charged Galleon Management and its founder Raj Rajaratnam in a broader case of insider trading and market manipulation, which included marking the close. In addition to insider trading, the case revealed instances where traders at Galleon were involved in marking the close to influence the end-of-day prices of stocks to benefit their trading strategies.
6. SEC v. CIBC World Markets Corp.
In 2003, the SEC charged CIBC World Markets Corp. and two of its traders for marking the close. The traders were accused of placing large orders for Nasdaq stocks in the final minutes of trading to manipulate their closing prices. The manipulation was intended to benefit the traders' proprietary positions, resulting in misleading end-of-day stock prices.
7. SEC v. Oakford Corp. (1999)
Oakford Corp. and its traders were charged with manipulating the closing prices of stocks to inflate the value of their portfolios by executing trades at the end of the trading day.
8. SEC v. Bluefin Trading LLC (2017)
Bluefin Trading LLC was charged with marking the close in multiple instances by placing large orders at the end of the trading day to influence the closing prices of options.
9. SEC v. David Slaine (2009)
David Slaine, a trader at Galleon, was implicated in marking the close by manipulating end-of-day prices to benefit his and his clients' positions.
10. FINRA v. Wedbush Securities (2013)
Wedbush Securities was fined for failing to supervise traders who were marking the close by placing trades at the end of the trading day to influence closing prices.
11. SEC v. JP Morgan Securities (2011)
JP Morgan Securities was fined for traders marking the close to manipulate the closing prices of various stocks to benefit their trading positions.
12. SEC v. Citadel LLC (2010)
Citadel LLC faced charges related to marking the close by executing large trades at the end of the trading day to influence the closing prices of certain stocks.
13. SEC v. SAC Capital Advisors (2013)
SAC Capital Advisors was charged with various forms of market manipulation, including marking the close to benefit its trading positions.
14. SEC v. UBS Securities LLC (2012)
UBS Securities LLC was fined for allowing traders to mark the close by placing trades in the final minutes of the trading day to manipulate closing prices.
15. SEC v. Knight Capital Americas LLC (2014)
Knight Capital Americas LLC faced charges for traders marking the close to manipulate the end-of-day prices of stocks.
16. SEC v. Credit Suisse Securities (2011)
Credit Suisse Securities was fined for supervisory failures that allowed traders to engage in marking the close to manipulate stock prices.
17. SEC v. RBC Capital Markets LLC (2015)
RBC Capital Markets LLC faced charges for traders marking the close by placing large orders at the end of the trading day to influence closing prices.
18. SEC v. Bank of America Merrill Lynch (2013)
Bank of America Merrill Lynch was fined for supervisory lapses that allowed traders to mark the close and manipulate the closing prices of stocks.
19. SEC v. Deutsche Bank Securities Inc. (2012)
Deutsche Bank Securities Inc. faced charges for traders marking the close to manipulate the end-of-day prices of certain stocks.
20. SEC v. Lehman Brothers (2008)
Lehman Brothers was charged with allowing traders to mark the close, manipulating the closing prices of stocks to benefit their trading positions.
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