Correspondence · Oct. 14, 2020

Whistleblower email to SEC alleging accounting fraud at a market maker, Oct. 2020

A whistleblower emails SEC staff alleging a market-making firm conceals insolvency from naked shorting and accuses the SEC of obstruction.Machine-written summary

EFTA00067894¶

Subject: Fw: Formal appeal for preliminary denial covered action 2015-016/ Knight Capital TCR & Appendix¶

Janey et al,¶

NITE/VIRT just released 3Q2020 earnings. A direct result of a massive, ongoing, SEC facilitated fraud on the public the SEC is mandated to protect¶

The Balance sheet fraud shell game continues.¶

https://www.sec.gov/Archives/edgar/data/1592386/000110465920122134/tm2034848d1_ex99-1.htm ¶

for the sell siders to ask on the earnings Call:¶

Tangible book BEFORE we get into mechanics of the massive, ongoing accounting fraud as a direct result of¶

illegal naked shorting OTCM (and other) shells:¶

I get les than $2/sh. Tell me where I’m wrong.¶

But, it’s MUCH MUCH MUCH worse than that;¶

Account receivable : $1.88 billion¶

Payable: $675 million¶

Difference: $1.2 billion¶

AR is where NITE books naked short fails as a result of self clearing. No intention/can’t deliver. More accurately: a liability¶

Further: prior commitment on this “asset”: settlement. Nothing NITE/VIRT can convert to cash for company use. Also:¶

Trading assets: the old securities owned¶

Trading liabilities: the old securities sold not yet purchased¶

Structural liability as a result of naked shorting. Propped up/off set by securities owned.¶

NITE/VIRT is grossly insolvent STILL/AGAIN/CONSTANTLY.¶

And, no breakdown of the vast driver of trading revenue: US equity market Making¶

Did NITE/VIRT exit the extremely low tech/cash OTCM trading business? NOPE¶

This illegal activity is extremely profitable. Virtually riskless in fact. AND is the driver of trading revenue. WHY the VIRT/KCG merger was done .¶

Abusive naked shorting OTCM/other shells to facilitate money laundering is and always has been the core¶

business at NITE. The SEC knows this. Where are disclosures in SEC filings of this high AML risk business? You¶

won’t find any. Cifu stopped reporting post merger. Not in Sell Side models either. INTENTIONALLY misleading the investing public as to the true nature of the NITE/VIRT business model.¶

In short: absolutely NOTHING has changed since the so called “glitch” as a direct result of SEC¶

corruption/obstruction. With help from the SDNY and Sell Side analists covering NITE/VIRT¶

Cheers!¶

Christopher J Dilorio¶

Whistleblower¶

From: Chris Dilorio <¶

Sent: Wednesday, October 14, 2020 9:00 AM¶

To:¶

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