Hackers
Bloomberg is plugging all the holes now that its computer security was reportedly breached by hackers. "We are not at liberty to discuss it," said Chris Taylor, a Bloomberg spokeswoman, "because if we did then it would no longer be secure." Oleg Zevov, 27, one of the two perpetrators operating out of the former Soviet republic in Central Asia, allegedly sent an e-mail to Michael Bloomberg stating he had passwords of several top employees, including Michael Bloomberg.
Zevov demanded $200,000 in return for disclosing how he masterminded the scam. Bloomberg deposited the money in London and later met there with the two scam artists. Shortly thereafter, Zezov and his accomplice Igor Yarimaka, 37, were arrested by two London police officers. Extradition proceedings are underway to bring both men to the U.S. to stand trial. Corporate superslueths Kroll Associates recommends rigorous audits for corporate networks in the wake of the Bloomberg episode. Closely monitor servers and the Internet, says Jason Paroff, managing director in the high-technology investigations group at Kroll in New York.
STA Conference
The annual conference of the Security Traders Association in Boca Raton, Fla., on Oct. 11 through 15, is scheduled to host Securities and Exchange Commission Chairman Arthur Levitt. The SEC chairman, who never shies away from controversy, should draw a standing-room only crowd. Other notables include Big Board Chairman Richard Grasso, NASD Regulation President Mary Shapiro and famed Prudential analyst Ralph Acamparo. On Saturday night the celebrities include political satirists Al Franken and P.J. O'Rourke.
STA affiliate delegates will elect four members to the 19-member STA Board of Governors for two-year terms, commencing on Jan. 1. Among the early crop of contenders are Stephen Bookbinder, Bloomberg Tradebook; Catherine (Cebby) Koepke, Cantor Fitzgerald; Thomas Gravina, Spear, Leeds & Kellogg and Richard Sorrentino, RBC Dominion Securities. "People could even be nominated from the floor," STA general counsel Andrew Grass noted.
Order Flow
Bowing to practical considerations, the Securities and Exchange Commission decided not to ban payment for order flow in the options market. The decision comes after the agency reviewed a plan by the Chicago Board Options Exchange that taxes its member specialists and dealers on options contracts. The plan helps the CBOE raise finance to purchase order flow. The CBOE is alarmed that specialist firms are paying for orders in the exchange's most active issues, but executing them away from the exchange. Other exchanges, including the American Stock Exchange, have followed the CBOE's example. SEC Chairman Arthur Levitt has reservations about payment for order flow but said it was hard to outlaw the practice. The SEC, however, will require brokers to disclose how much money they receive from order flow sales.
Regional IPOs
The five regional stock exchanges won a skirmish with the Big Board this month over first-day trading of IPOs. As of November 6, regional specialists will be allowed to trade the shares of companies going public on either of the two primary exchanges, on the first day of trading. Currently they must wait a day. The Securities and Exchange Commission amended its Rule 12f-2 after reviewing a study sponsored by the Chicago Stock Exchange. It demonstrated how first-day IPO stock-trading, conducted on more than one exchange, was less volatile than on a single exchange. Moreover, trading on multiple exchanges did not impair pricing.
The New York Stock Exchange and two underwriters convinced the SEC otherwise in 1995.
"This is great news," said Paul O'Kelly, the Chicago Stock Exchange executive vice president for market regulation and legal. He says the exchange benefits from more IPO volume. What's more, the exchange's customers will not have to route orders to the NYSE or the American Stock Exchange on the first day and to the CHX on the second day. They can simply set up one route to the CHX. The change does not affect trading in Nasdaq IPOs. Those have always been available for first-day trading on the regionals.
