Nicht So Gut News for Paul Berliner

The SEC has been making noise about going after the rumor mongerors, and are making an example of one trader. The SEC said Paul Berliner, a prop trader for Schottenfeld Group, spread false rumors on Nov. 29 that Blackstone was considering lowering its price for ADS, the rumors sent ADS stock down by 17% midday.

The Securities and Exchange Commission filed fraud charges against a former trader for spreading false rumors about Blackstone Group’s takeover bid for Alliance Data Systems Corp. and then profiting from the ruse.

The case comes as investigators probe whether a combination of false rumors and short-selling last month drove Bear Stearns Cos. to collapse. The SEC is also investigating short selling in Lehman Brothers stock, people familiar with the case said. WSJ

Still, Berliner is getting off relatively easy, paying a fine that was roughly 5x his profits and without cosenting guilt. If Chris Cox really wanted to punish him they should lock him in a room with Overstock CEO Patrick Byrne, who wrote an email to a Gradient Research employee that said:

“You deserve to be whipped, fucked, and driven from the land.”

Berliner’s impact, given the market cap losses he was able to inflict, was a real whopper of a fish tale.

SEC Charges Trader For ADS Stock Manipulation
WSJ

Gradient vs. Patrick Byrne: A Whopper of a Lawsuit
1440 Wall Street
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