April 19, 2014 8:12 AM ET

Diversified Financial Services

Company Overview of The NASDAQ Stock Market LLC

Company Overview

The NASDAQ Stock Market LLC is a registered national securities exchange for NASDAQ listed securities. It operates as an electronic stock market that offers securities listing, trading, and information products and services. The company caters to technology, retail, communications, financial services, transportation, media, and biotechnology industries. The NASDAQ Stock Market LLC was incorporated in 2005 and is based in the Rockville, Maryland. The NASDAQ Stock Market LLC operates as a subsidiary of Nasdaq OMX Group Inc.

9600 Blackwell Road

Rockville, MD 20850

United States

Founded in 2005

Phone:

301-978-8008

Fax:

301-978-8510

Key Executives for The NASDAQ Stock Market LLC

The NASDAQ Stock Market LLC does not have any Key Executives recorded.

The NASDAQ Stock Market LLC Key Developments

Shareholders in Facebook File Securities Fraud Action against Facebook Inc., Nasdaq Stock Market L.L.C., Nasdaq OMX Group Inc., Certain Nasdaq Officers and Other Parties

Shareholders in Facebook Inc. sued the company, Nasdaq Stock Market L.L.C., Nasdaq OMX Group Inc., certain NASDAQ officers and other parties, alleging direct and shareholder derivative securities fraud claims arising from actions taken by the defendants in connection with Facebook's IPO. On Dec. 16, 2013, the court denied in part the defendants' motion to dismiss the complaint. The case came before the court on the defendants' motion to alter or amend the Dec. 16, 2013, order to include a certification for interlocutory appeal under 28 U.S.C. 1292(b). The district court noted the defendants sought certification for interlocutory appeal of the issue of whether the economic loss doctrine barred the plaintiffs' common law negligence claims and as to whether the plaintiffs' federal securities claim was entitled to the presumption of reliance established under an applicable U.S. Supreme Court precedent. The court noted the Second U.S. Circuit Court of Appeals regularly denied interlocutory appeals at such preliminary stages where, as here, the appeal at most could lead only to a remand for repleading, with possibilities of further interlocutory appeals thereafter. Dismissal on appeal would not end multidistrict litigation. The court separately held the defendants failed to present exceptional circumstances necessary to grant an interlocutory appeal or show that an immediate appeal would advance the ultimate termination of the litigation. The defendants were incorrect that a dismissal on appeal on both issues would end the multidistrict litigation. The plaintiffs showed their intention and were granted leave to amend their complaint to reflect the findings of a related Securities and Exchange Commission opinion and the underlying evidence supporting those findings. Moreover, because the negligence and securities claims alleged similar facts, the district court concluded discovery will significantly overlap, and as a result, if either of the two claims was not fully dismissed on appeal, the litigation would continue to advance in substantially the same manner as if the interlocutory appeal never occurred.

The NASDAQ OMX Group, Inc. Announces the Appointment of Nine Directors to The NASDAQ Stock Market LLC, NASDAQ OMX PHLX LLC, and NASDAQ OMX BX, Inc. Boards

The NASDAQ OMX Group, Inc. announced the appointment of nine directors to The NASDAQ Stock Market LLC, NASDAQ OMX PHLX LLC, and NASDAQ OMX BX, Inc. Boards. Directors serve a one-year term. They are Leonard J. Amoruso, Executive Vice President of KCG Holdings, Inc; Daniel Bigelow, President and Managing Partner of Monadnock Capital Management L.P; Michael J. Curran, retired Chairman and Chief Executive Officer of the Boston Stock Exchange; Merit E. Janow, Dean, Columbia University's School of International and Public Affairs; William M. Lyons, retired President and Chief Executive Officer, American Century Companies, Inc.; John D. Markese, Vice Chairman, American Association of Individual Investors; A. Douglas Melamed, Senior Vice President and General Counsel, Intel Corporation; Eric W. Noll, Executive Vice President, Transaction Services, The NASDAQ OMX Group, Inc.; and Wendy S. White, Senior Vice President and General Counsel, University of Pennsylvania.

Financial Industry Regulatory Authority, Inc., Bats Trading, Inc., NYSE Arca, Inc., The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc. and the U.S. Securities and Exchange Commission Fine Hold Brothers LLC for Manipulative Trading, Anti-Money Laundering and Other Violations

Financial Industry Regulatory Authority, Inc. along with Bats Trading, Inc., NYSE Arca, Inc., The NASDAQ Stock Market LLC and NASDAQ OMX BX, Inc. announced that they have censured and fined Hold Brothers On-Line Investment Services, LLC’s $3.4 million for manipulative trading activities, anti-money laundering (AML), and other violations. In a related case, U.S. Securities and Exchange Commission announced a settlement with the company, fining the firm more than $2.5 million. FINRA announced that this is another example of a U.S.-based broker-dealer allowing a significant volume of overseas day trading to pass through its systems on a regular basis without devoting the appropriate level of resources and personnel to ensure this business was properly supervised. The company was actively involved in running the operations of these foreign entities, yet turned a blind eye to their manipulative trading activities and compliance with anti-money laundering requirements. This case also serves to underscore FINRA's and the exchanges' collective efforts to root out and pursue cross-market manipulative trading activities. Between January 1, 2009 and December 31, 2011, the company’s account, Demostrate LLC and an affiliate, Trade Alpha, were day-trading firms wholly owned and funded by the company’s principals. Demostrate and Trade Alpha engaged traders and trading groups in various foreign countries, primarily China, to trade its capital. FINRA found that Demostrate and Trade Alpha were controlled by, or under common control with, the company. Demostrate and Trade Alpha used sponsored access relationships with the company to connect to U.S. securities exchanges to manipulate the prices of multiple securities. FINRA uncovered hundreds of instances where the foreign day traders used spoofing and layering activities to induce the trading algorithms of unwitting market participants to provide the traders with favorable execution pricing that would not otherwise have been available to them in the absence of the day traders' illicit spoofing and layering activities. Generally, spoofing is a form of market manipulation which involves placing certain non-bona fide order, usually inside the existing National Best Bid or Offer (NBBO), with the intention of triggering another market participant to join or improve the NBBO, followed by canceling the non-bona fide order, and entering an order on the opposite side of the market. Layering involves the placement of multiple, non-bona fide, limit orders on one side of the market at various price levels at or away from the NBBO to create the appearance of a change in the levels of supply and demand, thereby artificially moving the price of the security. An order is then executed on the opposite side of the market at the artificially created price, and the non-bona fide orders are immediately canceled. FINRA also found thousands of instances where Demostrate or Trade Alpha traders engaged in pre-arranged trades and wash sales. The company also failed to establish and maintain a supervisory system and written procedures that were reasonably designed to supervise the firm's trading activities. FINRA found that numerous red flags indicative of suspicious trading were not detected or investigated. This included broad categories of significant suspicious trading, involving patterns of spoofing, layering, pre-arranged trading, and wash trading. In addition, FINRA found that the company’s AML policies, procedures, and internal controls were inadequate and failed to detect suspicious transactions and did not trigger the reporting of the suspicious transactions as required by the Bank Secrecy Act. Hold Brothers also failed to tailor its AML program to its business, as required. Between 2009 and 2011, the firm averaged approximately 400,000 trades per day, approximately 90% of which were placed through the Demostrate account. Despite this high volume of trading, Hold Brothers' AML procedures only provided for manual monitoring to detect suspicious trading activity in the accounts. There were also numerous instances when Hold Brothers' compliance department determined that Trade Alpha or Demostrate traders had engaged in suspicious or manipulative trading. These instances of suspicious activity were not escalated to the firm's AML compliance officer and the firm never considered filing a suspicious activity report relating to the activity. As part of the disciplinary action, FINRA and the exchanges also ordered the company to retain an independent consultant to conduct a comprehensive review of the adequacy of the firm's policies, systems and procedures, and training related to AML, trading, day trading, compliance with SEC Rule 15c3-5, and the use of foreign traders. In resolving these matters against Hold Brothers, FINRA and the exchanges took into consideration that the SEC's action included bars for three individual senior managers associated with the company. In concluding this settlement, the company neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

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