• SEC settled charges against Kershner Trading Americas, LLC (Kershner), for violating SEC short selling rule, when it purchased stock in 23 public offerings after shorting stock.
• This was during a time period when the SEC rule prohibited those purchases.

Allegations

• The SEC’s order finds that Kershner violated Rule 105 of Regulation M under SEA of 1934, 17 CFR 242.105, prohibits short selling equity security during restricted period.
• And then purchasing the same security in the offering, absent receiving an exception.
• The rule applies regardless of the trader’s intent and is designed to prevent potentially manipulative short selling before pricing of covered offerings, usually 5 business days.
• Between February 2019 and June 2022, Kershner violated Rule 105 by participating in twenty-three follow-on offerings after it had engaged in short selling of same securities.
• Company has agreed to undertake certain actions to comply with Rule 105 if Kershner wishes to purchase equity securities in any covered offering in the future.
• These include adopting, implementing, training, maintaining written compliance policies and procedures reasonably designed to prevent SEC violations in the future.

Enforcement

• Will cease and desist violations of Rule 105 and pay a disgorgement of $593,375.76.
• As well as, prejudgment interest of $94,268.84 and a civil penalty of $812,355.40.