© Reuters. Wall St. sign sighted in New York City, USA, March 13, 2023. REUTERS/Brendan McDermid
By Chris Prentice
WASHINGTON (Reuters) – Short selling, the activity of profiting from bets that stocks will fall, is a major focus of US prosecutors and the Justice Department will see more activity in the coming months. , a top ministry official said on Wednesday.
The recent stock drop in US regional banks has brought criminal prosecutors and short-sellers regulator scrutiny to the fore, who have previously been subject to scrutiny after the craze.” meme stocks” in 2021, Reuters and other media have reported.
But Wednesday’s remarks by the market integrity chief of the Justice Department’s fraud division are the first time a DOJ official has spoken openly about this relatively new area of focus.
Avi Perry, market integrity leader, said at an event for the Law Institute of Practice in New York, short selling, including through options, is a top priority for prosecutors.
“You will see some more activity from us involving short sellers in the next few months,” he said.
Perry declined to comment further when Reuters asked for details on whether the agency was expected to bring charges.
Reuters has reported in recent weeks that prosecutors and other regulators are looking into the practice of shorting bank stocks, which has plummeted after three bank failures since March. .
Since at least 2021, the U.S. Department of Justice and the Securities and Exchange Commission have been investigating possible manipulation by short sellers and hedge funds around the publication of negative research reports.
The broad poll is an example of the agency’s efforts to use data to weed out potential misconduct by traders and dig deeper into the stock market.
Perry also said that cases against executives abusing the company’s trading plans and spoofing – a type of futures market manipulation technique – remain areas of priority.