Van der Moolen
Encyclopedia
Van der Moolen was a Dutch
equity
trading firm, with its headquarters located in Amsterdam
. They were mainly active in the United States and in Europe
, particularly in the Netherlands, France
, Germany
, Switzerland
and the United Kingdom
.
Originally known as Van der Moolen & Co., it was founded in July 1892 as a 'jobber' or 'hoekman' which traded in equities and bonds
. The company started its expansion in the derivatives markets in the late 1970’s. Van der Moolen became a limited liability company in December 1986 and soon afterwards was listed on the Amsterdam Stock Exchange
(AEX). The Company’s shares were also listed on the New York Stock Exchange
('NYSE') in October 2001.
In 2001, Van der Moolen launched VDM Bonds to provide fixed income
liquidity in less-than-wholesale transaction sizes to banks and other intermediaries. VDM Bonds was sold to Zions Bancorporation
in March 2004 after its management team left the company.In January 2006, VDM acquired Curvalue, a Dutch trading company specialized in derivative
trading.
On the New York Stock Exchange
, Van der Moolen served as specialist
until 2007 when it sold the activities to Lehman Brothers
. At one point Van der Moolen USA’s specialist book had represented 15% of the NYSE listed common stocks and accounted 11% of the NYSE's volume. Regulatory changes which slashed margins for market makers and allowed a flood of new competition for trading volume significantly impaired the profitability of this VDM unit. Previously in 2003, Van der Moolen Specialists became subject to an investigation by the SEC
on allegations of front running
. In 2004, Van der Moolen reached a settlement with the SEC and paid a fine of $57.7 million. Some employees were convicted of fraud
, while others (Robert Scavone Jr.) were later acquitted.
On August 10, 2009 Van der Moolen requested protection from its creditors a short time after opening its new headquarters near Amsterdam airport. On September 10, 2009 Van der Moolen filed for bankruptcy. The company assets in the Netherlands were liquidated in January 2010 with an auction raising Euro 400,000 against creditor claims for Euro 28.3 million. Van der Moolen's dealings are being investigated by the Dutch market regulator AFM
.
As of 23 December 2010 Van der Moolen shares were no longer listed on the Euronext
Amsterdam exchange
.
According to an report dated 13 May 2011 by the Enterprise Chamber of the Amsterdam Appeals Court, prior to bankrupcy Van der Moolen's management didn’t seem in control of the company's dividend-arbitrage activities, and attention to capital management and external financing was limited. The Dutch investor group VEB and insurer ASR Nederland NV had asked the Enterprise Chamber to investigate the firm’s management. VEB now can ask the court to assert mismanagement, which may lead to damage claims.
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
equity
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
trading firm, with its headquarters located in Amsterdam
Amsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...
. They were mainly active in the United States and in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
, particularly in the Netherlands, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
and the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
.
Originally known as Van der Moolen & Co., it was founded in July 1892 as a 'jobber' or 'hoekman' which traded in equities and bonds
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
. The company started its expansion in the derivatives markets in the late 1970’s. Van der Moolen became a limited liability company in December 1986 and soon afterwards was listed on the Amsterdam Stock Exchange
Amsterdam Stock Exchange
The Amsterdam Stock Exchange is the former name for the stock exchange based in Amsterdam. It merged on 22 September 2000 with the Brussels Stock Exchange and the Paris Stock Exchange to form Euronext, and is now known as Euronext Amsterdam.-History:...
(AEX). The Company’s shares were also listed on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
('NYSE') in October 2001.
In 2001, Van der Moolen launched VDM Bonds to provide fixed income
Fixed income
Fixed income refers to any type of investment that is not equity, which obligates the borrower/issuer to make payments on a fixed schedule, even if the number of the payments may be variable....
liquidity in less-than-wholesale transaction sizes to banks and other intermediaries. VDM Bonds was sold to Zions Bancorporation
Zions Bancorporation
Zions Bancorporation is a member of the S&P 500, a bank holding company headquartered in Salt Lake City, Utah, USA. Among its subsidiaries are Amegy Bank of Texas, California Bank & Trust, National Bank of Arizona, Nevada State Bank, the Commerce Bank of Oregon, the Commerce Bank of Washington,...
in March 2004 after its management team left the company.In January 2006, VDM acquired Curvalue, a Dutch trading company specialized in derivative
Derivative
In calculus, a branch of mathematics, the derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought of as how much one quantity is changing in response to changes in some other quantity; for example, the derivative of the position of a...
trading.
On the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
, Van der Moolen served as specialist
Market maker
A market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. From a market microstructure theory standpoint, market makers are net sellers of an option to be...
until 2007 when it sold the activities to Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
. At one point Van der Moolen USA’s specialist book had represented 15% of the NYSE listed common stocks and accounted 11% of the NYSE's volume. Regulatory changes which slashed margins for market makers and allowed a flood of new competition for trading volume significantly impaired the profitability of this VDM unit. Previously in 2003, Van der Moolen Specialists became subject to an investigation by the SEC
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
on allegations of front running
Front running
Front running is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers...
. In 2004, Van der Moolen reached a settlement with the SEC and paid a fine of $57.7 million. Some employees were convicted of fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, while others (Robert Scavone Jr.) were later acquitted.
On August 10, 2009 Van der Moolen requested protection from its creditors a short time after opening its new headquarters near Amsterdam airport. On September 10, 2009 Van der Moolen filed for bankruptcy. The company assets in the Netherlands were liquidated in January 2010 with an auction raising Euro 400,000 against creditor claims for Euro 28.3 million. Van der Moolen's dealings are being investigated by the Dutch market regulator AFM
Netherlands Authority for the Financial Markets
The Netherlands Authority for the Financial Markets is the financial services regulatory authority for the Netherlands. Its role is comparable to the role of the SEC in the United States.-History:...
.
As of 23 December 2010 Van der Moolen shares were no longer listed on the Euronext
Euronext
Euronext N.V. is a pan-European stock exchange based in Amsterdam and with subsidiaries in Belgium, France, Netherlands, Portugal and the United Kingdom. In addition to equities and derivatives markets, the Euronext group provides clearing and information services...
Amsterdam exchange
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
.
According to an report dated 13 May 2011 by the Enterprise Chamber of the Amsterdam Appeals Court, prior to bankrupcy Van der Moolen's management didn’t seem in control of the company's dividend-arbitrage activities, and attention to capital management and external financing was limited. The Dutch investor group VEB and insurer ASR Nederland NV had asked the Enterprise Chamber to investigate the firm’s management. VEB now can ask the court to assert mismanagement, which may lead to damage claims.