SEC v. Hal D. Mintz; and Sabby Management LLC, No. LR-25746, District of New Jersey (June 14, 2023) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25746 / June 14, 2023 Securities and Exchange Commission v. v. Hal D. Mintz and Sabby Management LLC, No. 2:23-cv-03201 (D. N.J.) filed June 12, 2023 SEC Charges Investment Adviser and Principal in Abusive Naked Short Selling Scheme The Securities and Exchange Commission today charged investment adviser Sabby Management LLC and its managing partner, Hal D. Mintz, with fraud in connection with a long running scheme involving misrepresentations and violations of rules for short selling and order making, as well as other violative trading, that generated more than $2 million in illegal profits. The SEC's complaint alleges that, from at least March 2017 through May 2019, Sabby and Mintz repeatedly circumvented trading rules to conduct unlawful trades in the stock of at least 10 public companies. Short selling is a legal practice where, generally, a trader borrows a security from a securityholder and sells the security at one price, speculating that the trader can buy the security at a lower price in the future before it must be returned to its owner. As alleged in the complaint, for example, Sabby and Mintz engaged in illegal "naked short selling" by intentionally and improperly placing short sales when they knew or were reckless in not knowing that they had not borrowed or located the shares, and then failed to make timely delivery of the shares. According to the SEC's complaint, the purpose of Sabby and Mintz's fraudulent scheme was to earn profits they could not have gained through legal trading. Additionally, as the complaint alleges, on occasion Sabby and Mintz used their naked short selling to artificially deflate the price of securities, allowing them to obtain more shares at a cheaper price. The SEC's complaint further alleges that Sabby and Mintz tried to conceal their fraudulent trading, including by using securities acquired after the trades to make it appear to brokers executing the trades that they had complied with the requirement to have borrowed or located the shares prior to their trades. As the complaint alleges, when questioned by at least one broker regarding their trading, Sabby and Mintz repeatedly lied about the trading. The SEC's complaint, filed in the U.S. District Court for the District of New Jersey, charges Sabby and Mintz with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 10b-21 thereunder. The complaint also charges Sabby with violations of Sections 204 and 206(4) of the Investment Advisers Act of 1940 and Rules 204-2 and 206(4)-7 thereunder and charges Mintz with aiding and abetting those violations. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. The SEC's investigation was conducted by Edward Reilly and Christopher Mathews, with assistance from Patrick McCluskey and Brian Shute, under the supervision of Amy Friedman and Carolyn Welshhans. The litigation will be led by Daniel Maher and Mr. Reilly and supervised by David Nasse.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25746 / June 14, 2023 Securities and Exchange Commission v. v. Hal D. Mintz and Sabby Management LLC, No. 2:23-cv-03201 (D. N.J.) filed June 12, 2023 SEC Charges Investment Adviser and Principal in Abusive Naked Short Selling Scheme The Securities and Exchange Commission today charged investment adviser Sabby Management LLC and its managing partner, Hal D. Mintz, with fraud in connection with a long running scheme involving misrepresentations and violations of rules for short selling and order making, as well as other violative trading, that generated more than $2 million in illegal profits. The SEC's complaint alleges that, from at least March 2017 through May 2019, Sabby and Mintz repeatedly circumvented trading rules to conduct unlawful trades in the stock of at least 10 public companies. Short selling is a legal practice where, generally, a trader borrows a security from a securityholder and sells the security at one price, speculating that the trader can buy the security at a lower price in the future before it must be returned to its owner. As alleged in the complaint, for example, Sabby and Mintz engaged in illegal "naked short selling" by intentionally and improperly placing short sales when they knew or were reckless in not knowing that they had not borrowed or located the shares, and then failed to make timely delivery of the shares. According to the SEC's complaint, the purpose of Sabby and Mintz's fraudulent scheme was to earn profits they could not have gained through legal trading. Additionally, as the complaint alleges, on occasion Sabby and Mintz used their naked short selling to artificially deflate the price of securities, allowing them to obtain more shares at a cheaper price. The SEC's complaint further alleges that Sabby and Mintz tried to conceal their fraudulent trading, including by using securities acquired after the trades to make it appear to brokers executing the trades that they had complied with the requirement to have borrowed or located the shares prior to their trades. As the complaint alleges, when questioned by at least one broker regarding their trading, Sabby and Mintz repeatedly lied about the trading. The SEC's complaint, filed in the U.S. District Court for the District of New Jersey, charges Sabby and Mintz with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 10b-21 thereunder. The complaint also charges Sabby with violations of Sections 204 and 206(4) of the Investment Advisers Act of 1940 and Rules 204-2 and 206(4)-7 thereunder and charges Mintz with aiding and abetting those violations. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. The SEC's investigation was conducted by Edward Reilly and Christopher Mathews, with assistance from Patrick McCluskey and Brian Shute, under the supervision of Amy Friedman and Carolyn Welshhans. The litigation will be led by Daniel Maher and Mr. Reilly and supervised by David Nasse.