A Glenbrook District 225 board member is accused of making more than $17 million from illegal short selling

Northbrook resident Jeffrey Wolfson, 58, a broker formerly associated with the Chicago Board of Options Exchange, and his brother, Robert, a New York based broker, were charged Tuesday for “failing to locate and deliver shares involved in short sales to broker-dealers,” according to the Securities Exchange Commission.

Stocks Wolfson is accused of selling short include Chipotle Mexican Grill Inc., Fairfax Financial Holdings Ltd., Novastar Financial Inc.and NYSE Group.

While short-selling is not illegal, selling shares that have not been borrowed on time with the intention of driving down the price of that security is illegal.

“What I sell them is not guaranteed, it never gets delivered, it’s funny paper,” Wolfson said in a telephone conversation recorded as part of the investigation, according to a SEC press release.

According to the release, Jeffrey Wolfson engaged in illegal sales while working as a broker-dealer and as the principal trader at a Chicago-based broker. He is also accused of teaching his brother and others how to illegally short sell.

“By engaging in naked short selling, the Wolfsons had a major advantage over competitors who complied with the law and incurred the costs associated with actually borrowing the securities,” said George Canellos, Director of the SEC’s New York Regional Office.

“The SEC is committed to recovering substantial ill-gotten proceeds made by traders who seek to circumvent important short selling regulations,” Canellos said.

According to the Glenbrook District 225 website, Wolfson’s board assignments include Finance Committee and the District 225 Foundation.

A Glenbrook School District spokesperson declined comment, saying the charges were not a district matter.