Stephen Senderowitz, a partner in Winston & Strawn's Chicago office who specializes in defending securities and commodities litigation, was quoted in two Bloomberg articles titled "OptionsXpress Accused by SEC of Naked Short-Sale Violations" and "SEC Says OptionsXpress Violated Registration Requirements."
Mr. Senderowitz is defense counsel for optionsXpress in both the Reg Sho and registration cases and also represents its affiliate OX Trading in the registration case.
In the Reg Sho matter, the SEC alleged in an order instituting an administrative case that by permitting certain customers to trade an options box spread strategy utilizing buy writes, where the "writes" were allegedly deep in the money calls, optionsXpress was creating the illusion of satisfying Reg Sho's assignment covering provisions without really doing so. Mr. Senderowitz said: "We believe the evidence at trial will demonstrate that OptionsXpress timely covered consistent with Reg SHO." The firm was in touch with regulators regarding the transactions, no one was defrauded, and the transactions "were not shams and were neither novel nor exotic."
In the registration matter, the SEC issued an order instituting an administrative proceeding against OX Trading, optionsXpress' affiliate, alleging that OX Trading failed to register as a broker-dealer for part of the time it was operating. OX Trading was formed in 2007 as a proprietary trading firm with its principal purpose to provide price improvement to optionsXpress customers. OX Trading recently was closed in anticipation of the implementation of the Volcker rule.
As Mr. Senderowitz told Bloomberg News: "The issue that will be presented to the Administrative Law Judge is whether a trading entity whose principal function was to provide price improvement for its affiliate's customers acted as a dealer, which required registration, or as a proprietary trading firm, which did not. OptionsXpress is a separate entity, had nothing to do with OX Trading's registration and does not belong in this case."