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SEC Charges Miami-Based Investment Advisor With Securities Fraud

On June 12th, 2023, the Securities and Exchange Commission (SEC) announced securities fraud charges against a Miami-FL based investment advisor named Hal D. Mintz. The last known address of Mr. Mintz is in Miami Beach. A Texas based company that he owned and controlled (Sabby Management LLC) was also named as a defendant. Within this blog post, our Florida investor losses attorney explains what we know about the allegations raised by federal regulators.

Securities Fraud Complaint: Hal D. Mintz of Miami, Florida 

The Securities and Exchange Commission (SEC) filed a complaint against Hal D. Mintz and his company Sabby Management LLC in the United States District Court for the District of New Jersey. Within the fraud complaint, the SEC contends that Mr. Mintz—who was the managing partner at Sabby Management LLC—engaged in a scheme of unlawful “naked short selling.” The SEC contends that Mr. Mintz amassed more than $2 million in illicit profits between 2017 and 2018. The illicit activities included misrepresentation, violation of short-selling and order-making rules, and manipulation of security prices. The is seeking permanent injunctions, disgorgement of illegal profits with interest, and civil penalties.

What is Illegal Naked Short Selling? (Understanding Through an Example) 

Illegal naked short selling is a fraudulent trading practice involving short selling of shares that the trader does not possess and has not confirmed to be available for borrowing. In typical short selling, a trader borrows shares, sells them, and later repurchases them at a lower price to return to the lender, profiting from the price difference. However, in illegal naked short selling, the trader sells shares without borrowing/confirming their availability, hoping to repurchase them at a lower price.

For example, suppose a trader anticipates that the price of company X will drop. They might sell 100 shares of company X that they do not own, at $20 each, making $2,000. Later, if the price falls to $15, they buy these shares for $1,500 and pocket the $500 difference. But, in this case, they never confirmed or borrowed the shares before selling. In effect, they sold something they did not own.

 Securities Regulations are Designed to Protect Investors

 Securities regulations serve as a safeguard for investors. Among other things, these rules mandate full disclosure of pertinent information, thwart manipulative practices, and ensure securities issuers and intermediaries adhere to a standard of conduct that places investor interests paramount. By creating an environment of trust and predictability, securities laws and regulations help to foster the investor confidence that is critical for the functioning of capital markets.

 Consult With a Miami, FL Investment Fraud Attorney for Immediate Help With Your Case

At ​Carlson & Associates, P.A., our Miami investor losses attorneys are committed to representing our clients with dedication, tenacity, and high level professional skill. Did you or someone you know lose a large amount of money due to securities law violations? We can help. Contact us at our Miami law office today to arrange your confidential initial case evaluation.

Sources:

sec.gov/files/litigation/complaints/2023/comp-pr2023-107.pdf

sec.gov/news/press-release/2023-107

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