U.S. – SEC Settles Short Selling Charges

U.S. – SEC Settles Short Selling Charges

On 21 February 2024, SEC settled short selling charges against Contrarian Capital.

  • SEC charged Contrarian Capital Management, LLC for violations of the SEC's short selling rule, Rule 105 of Regulation M (17 CFR 242.105) per Securities exchange act.
  • Rule 105 of Regulation M prohibits short selling an equity security during a restricted period, and then purchasing the same security in the offering, absent an exception.
  • Applies regardless of intent, designed to prevent potentially manipulative short selling.

Alleged Violations

  • Firm purchased stock in two public offerings of securities for advisory clients after effecting short sales in the same stock for advisory clients, prohibited by the SEC.
  • Firm participated in two covered offerings of securities, in April and June 2020, after effecting short sales of the same securities during the respective restricted periods.
  • In each instance, the short sales resulted from the exercise and assignment of call options that Contrarian had sold on behalf of its clients prior to the restricted period.


  • Firm agreed to cease and desist, $350k disgorgement, $29.6k interest, $140k penalty.