SEC Fines for Short Selling Violations

SEC Fines for Short Selling Violations

On 14 June 2022, SEC charged Weiss IA firm with short selling violations.

  • SEC reported that it charged Weiss Asset Management with short selling violations.
  • IA firm agreed to pay about $ to settle charges it violated federal securities laws when it unlawfully purchased stocks in 7 public offerings after selling same stock short.

Alleged Violations

  • According to order finding, on 7 occasions between December 2020 and February 2021, Weiss Asset Management violated Rule 105 of Regulation M, contained in 17 CFR 242.105.
  • Violations occurred because it repeatedly miscalculated restricted period and dismissed a number of red flags raised by its internal controls that suggested possible violations.
  • Firm improperly benefited by participating in offerings, over $6.5mn in ill-gotten gains.
  • Order highlighted significant remedial efforts undertaken by Weiss Asset Management.
  • Also cooperation in investigation, including self-reporting violations to staff after review of its trading records, segregating ill-gotten profits, updating its compliance, training.

Settlement Order

  • Weiss Asset Management agreed to disgorge profits of $6,508,793 and to pay interest of $190,211 and a penalty of $200,000, and cease and desist from future violations.