These proceedings arise out of a separate SEC Order involving optionsXpress, Inc.’s violation of the delivery and close-out requirements of Reg. SHO.  From at least October 2008 to 3/18/10, the firm failed to satisfy its close-out obligations under Rules 204 and 204T of Reg. SHO by repeatedly engaging in a series of transactions, known as "resets," which gave the appearance of having purchased shares to close-out an open failure-to-deliver position while in fact not doing so. The resets were accomplished by optionsXpress facilitating its customers buying shares and simultaneously selling deep in-the-money call options that were essentially the economic equivalent of selling shares short.  The purchase of shares created the illusion that the firm had satisfied the close-out obligation; however, the shares that were ostensibly purchased in the reset transactions were never actually delivered to the purchasers because on the same day the shares were "purchased," the deep in-the-money calls were exercised, thereby effectively reselling the shares.  These paired reset transactions were not bona fide purchases because their purpose was to perpetuate an open short position while giving the illusion of satisfying the delivery and close-out requirements of Reg. SHO. During the relevant period, optionsXpress and several customers routinely engaged in these paired reset transactions in a number of securities - e.g., Sears Holding, AIG, Chipotle Mexican Grill, JoS. A. Bank Clothiers, and Mead Johnson Nutrition.  As a result, optionsXpress and its customers had continuous failures to deliver in these and other securities that persisted for months, thereby undermining the purpose of Rules 204 and 204T of Reg. SHO. SEC Ties In Compliance Officers and Agrees to Settlement of Cooperation. For the same 18-month period as noted above, Peter Bottini, Phillip Hoeh, and Kevin Strine, were a cause of optionsXpress’ violations of Rules 204 and 204T of Reg. SHO as they knew or should have known that their acts or omissions as described below would contribute to these violations. All three respondents agreed to settle the SEC charges, which imposed no financial nor suspensions.  Instead, each agreed to cooperate fully with the SEC in any and all investigations, litigations or other proceedings relating to or arising from the matters involving optionsXpress.  This cooperation includes terms and provisions that call for Bottini, Hoeh, and Strine to:

• produce, without service of a notice or subpoena, any and all non-privileged documents and other information requested by SEC staff;
• be interviewed by SEC staff at such times as the staff reasonably may request and to appear;
• and testify without service of a notice or subpoena in such investigations, litigations, hearings or trials as may be requested by SEC staff; and
• in connection with any testimony of the Respondents to be conducted at deposition, hearing or trial pursuant to a notice or subpoena, agree that any such notice or subpoena for Respondents’ appearance and testimony may be served by regular mail on their respective counsel.

NOTE:  STORY IN PROGRESS - TO BE UPDATED SHORTLY For further details, go to:  [SEC Order, Administrative Proceeding File No. 3-14847].