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SEC has an active and ongoing investigation on Softbank ‘Nasdaq whale’

ComplianceX | Mar 25, 2021

compliance investigation - SEC has an active and ongoing investigation on Softbank 'Nasdaq whale'On Wednesday, short seller research site PlainSite posted a letter from the Securities and Exchange Commission on Twitter revealing that the agency is investigating SoftBank, the Japanese telecommunications company and investing giant notorious for financing various unprofitable “technology” companies like WeWork, Uber, Compass, and Oyo.

Aaron Greenspan, founder of the Think Computer Foundation that runs Plainsite, filed a FOIA request in December 2020 for “any investigative materials [from January 1, 2018 to the present] pertaining to the various SoftBank companies controlled by Masayoshi Son, specifically relating to SoftBank’s trading of stocks and derivatives on those stocks.”

This request was filed in response to the revelation last fall that SoftBank was the “Nasdaq whale.”

SoftBank was responsible for stoking a huge rally in tech stocks, the Financial Times reported, because around August it began buying billions of dollars worth of call options in a shift for the company, fueling a rally that pushed up the share prices of tech companies it held billions of dollars of equity in.

Thanks in large part to a rally sparked by SoftBank’s high-risk market plays, firms like Tesla and Apple were up 74 and 21 percent, respectively, in the month of August alone. Executed through a small desk of traders and chief executive Masayoshi Son himself, the trading unit―named SB Northstar―and its bets won the company some $4 billion in gains at the beginning of September, before quickly melting away into nearly $3 billion in losses by the end of the month.

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In a January letter responding to Greenspan’s initial request, and months after the reporting on Softbank became public, the SEC said that its search did not turn up any relevant records. Greenspan appealed the decision on March 9 and two weeks later received a letter saying that responsive records were identified, but they could not be released under legal provisions that cover ongoing investigations.

“We have confirmed with Division of Enforcement staff that the investigation from which you seek records is still active and ongoing,” the SEC letter stated.

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