Securities Fraud Proved at Defunct Brokerage
January 15, 2004
Cleary Gottlieb obtained summary judgment today for the Trustee of Adler Coleman, persuading the Southern District of New York that the brokers who ran the now-shuttered brokerage firm Hanover Sterling engaged in securities fraud.
Adler Coleman, a clearing firm, failed in 1995 because of extensive short sales of stock Hanover Sterling was selling to the public. At the time, it was the largest failure of a clearing firm in decades. Hanover’s response to the short sales, and Adler’s demise, was reported in Business Week, Fortune, Forbes and The New York Times, inspired the movie Boiler Room, and is the subject of Gary Weiss’s new book Born to Steal.