In the Matter of BT Securities Corporation

58 S.E.C. Docket 1145, 1994 SEC LEXIS 4041 (1994)

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In the Matter of BT Securities Corporation

Securities and Exchange Commission
58 S.E.C. Docket 1145, 1994 SEC LEXIS 4041 (1994)

SC

Facts

The Securities and Exchange Commission (SEC) (plaintiff) instituted enforcement proceedings against BT Securities Corporation (BT Securities) (defendant). The SEC alleged that BT Securities violated securities laws by making material misrepresentations in its sale of derivatives to Gibson Greetings, Inc. (Gibson). The SEC found the following, which BT Securities consented to in a settlement for purposes of this proceeding; BT Securities did not admit or deny the findings. BT Securities engaged in a series of derivative transactions with Gibson, including treasury-linked swaps and knock-out call options. The derivatives did not trade in any market. Bankers Trust Company, the counterparty to the derivatives, used a computer model to set the value of the derivatives. Gibson relied on the values set by Bankers Trust. Over this time period, BT Securities continually presented Gibson with values of the derivatives that were different than the values calculated by the computer model and that substantially understated Gibson’s losses. Gibson filed financial statements with the SEC during this time based on the information that BT Securities provided.

Rule of Law

Issue

Holding and Reasoning ()

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