KEVIN EUGENE STRINE is currently employed as a Broker and/or Investment Adviser at CHARLES SCHWAB & CO., INC. located at 150 S Wacker Drive, Chicago, IL, 60606-4111.
KEVIN EUGENE STRINE has worked at CHARLES SCHWAB & CO., INC. since April 21, 2015
Disclosure History
KEVIN EUGENE STRINE has 1 Disclosure Event(s).
Date: April 16, 2012 Category: Regulatory Initiated By: UNITED STATES SECURITIES AND EXCHANGE COMMISSION Allegations: SEC ADMINISTRATIVE RELEASE 34-66814, APRIL 16, 2012: THE SECURITIES AND EXCHANGE COMMISSION DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT CEASE-AND-DESIST PROCEEDING BE, AND HEREBY IS, INSTITUTED PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934 AGAINST KEVIN E. STRINE ("RESPONDENT"). RULES 204 AND 204T OF EXCHANGE ACT REG. SHO: THESE PROCEEDINGS ARISE OUT OF THE RESPONDENT'S MEMBER FIRM'S VIOLATION OF THE DELIVERY AND CLOSE-OUT REQUIREMENTS OF REGULATION SHO OF THE EXCHANGE ACT ("REG. SHO"). FROM AT LEAST OCTOBER 2008 TO MARCH 18, 2010, THE FIRM FAILED TO SATISFY ITS CLOSE-OUT OBLIGATIONS UNDER RULES 204 AND 204T OF REG. SHO BY REPEATEDLY ENGAGING IN A SERIES OF TRANSACTIONS, KNOWN AS "RESETS," WHICH GAVE THE APPEARANCE OF HAVING PURCHASED SHARES TO CLOSE-OUT AN OPEN FAILURE-TO-DELIVER POSITION WHILE IN FACT NOT DOING SO. THE RESETS WERE ACCOMPLISHED BY THE FIRM FACILITATING ITS CUSTOMERS BUYING SHARES AND SIMULTANEOUSLY SELLING DEEP IN-THE-MONEY CALL OPTIONS THAT WERE ESSENTIALLY THE ECONOMIC EQUIVALENT OF SELLING SHARES SHORT. THE PURCHASE OF SHARES CREATED THE ILLUSION THAT THE FIRM HAD SATISFIED THE CLOSE-OUT OBLIGATION; HOWEVER, THE SHARES THAT WERE OSTENSIBLY PURCHASED IN THE RESET TRANSACTIONS WERE NEVER ACTUALLY DELIVERED TO THE PURCHASERS BECAUSE ON THE SAME DAY THE SHARES WERE "PURCHASED," THE DEEP IN-THE-MONEY CALLS WERE EXERCISED, THEREBY EFFECTIVELY RESELLING THE SHARES. THESE PAIRED RESET TRANSACTIONS WERE NOT BONA FIDE PURCHASES BECAUSE THEIR PURPOSE WAS TO PERPETUATE AN OPEN SHORT POSITION WHILE GIVING THE ILLUSION OF SATISFYING THE DELIVERY AND CLOSE-OUT REQUIREMENTS OF REG. SHO. THE FIRM AND SEVERAL CUSTOMERS ROUTINELY ENGAGED IN THESE PAIRED RESET TRANSACTIONS IN A NUMBER OF SECURITIES. AS A RESULT, THE FIRM AND ITS CUSTOMERS HAD CONTINUOUS FAILURES TO DELIVER IN THESE AND OTHER SECURITIES THAT PERSISTED FOR MONTHS, THEREBY UNDERMINING THE PURPOSE OF RULES 204 AND 204T OF REG. SHO. THE RESPONDENT WAS A CAUSE OF HIS FIRM'S VIOLATIONS OF RULES 204 AND 204T OF REG. SHO AS HE KNEW OR SHOULD HAVE KNOWN THAT HIS ACTS OR OMISSIONS WOULD CONTRIBUTE TO THESE VIOLATIONS. THERE WERE SIX SELF-DIRECTED CUSTOMER ACCOUNTS AT THE FIRM ENGAGED IN REVERSE CONVERSIONS AND SIMILAR OPTIONS TRADING STRATEGIES. IN THESE TRANSACTIONS, THE CUSTOMERS SIMULTANEOUSLY ENTERED INTO THE SALE OF A PUT AND PURCHASE OF CALL WITH IDENTICAL STRIKE PRICES AND EXPIRATION DATES CREATING A SYNTHETIC LONG POSITION. THE NEWLY WRITTEN DEEP-IN-THE-MONEY CALLS WERE GENERALLY EXERCISED THE SAME DAY THEY WERE SOLD (AND THUS WERE ASSIGNED TO THE CUSTOMERS LATER THAT SAME DAY) PUTTING THE CUSTOMERS BACK IN THEIR ORIGINAL SHORT POSITION, CONTINUING THE FAILURE-TO-DELIVER POSITION, AND CAUSING THEM TO ENTER INTO ANOTHER BUY-WRITE THE FOLLOWING DAY. AS A RESULT, THE FIRM MAINTAINED A NET SHORT POSITION AT THE END OF EACH DAY. THE FIRM AND THE CUSTOMERS KNEW, OR SHOULD HAVE KNOWN, THAT MOST, IF NOT ALL, THE CALLS THAT WERE SOLD AS PART OF THE BUY-WRITES WOULD BE EXERCISED AND ASSIGNED ON THE SAME DAY THEY WERE SOLD, RESULTING IN SHARES NOT BEING DELIVERED ON SETTLEMENT; A RESULT FOR FAILURES-TO-DELIVER TRANSACTIONS. THE BUY-WRITES CONTINUED ON A DAILY BASIS UNTIL THE ORIGINAL SYNTHETIC LONG POSITION WAS UNWOUND OR EXPIRED. AS A RESULT, THE FIRM HAD A CONTINUOUS NEGATIVE (OR FAILURE-TO-DELIVER) POSITION IN A NUMBER OF SECURITIES IN THE NATIONAL SECURITIES CLEARING CORPORATION'S CONTINUOUS NET SETTLEMENT SYSTEM FOR EXTENDED PERIODS OF TIME. THE RESPONDENT KNEW OR SHOULD HAVE KNOWN THAT THE TRADING WAS PROBLEMATIC. DESPITE THE EXPRESSION OF CONCERN FROM FINRA, THE FIRM CONTINUED TO ALLOW THE BUY-WRITES. THE FIRM AND ALL OF THE CUSTOMERS RECEIVED SUBPOENAS FROM THE SEC. THE SEC TOLD THE FIRM THAT THEY HAD "GRAVE CONCERNS" ABOUT THE TRADING. THE BUY-WRITES CONTINUED. THE DECISION TO HALT THE TRADING WAS MADE BY TWO REPRESENTATIVES OF THE FIRM. Resolution: Order SanctionDetails: Sanctions: Cease and Desist
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