SEC Announces Largest Monetary Sanction for Rule 105 Short Selling Violations (with Lofchie Comment)

The SEC announced the largest-ever monetary sanction for violations of Regulation M Rule 105 ("Short Selling in Connection with a Public Offering").

The SEC found that the persons who were charged had engaged in a repeated practice of violations. They were required to pay $7.2 million to settle the charges.

Lofchie Comment: It should be obvious by this point that the SEC's technology is quite good at catching violations of Rule 105. Apart from firms like the accused, which was seemingly engaged in systematic violations, other firms should be mindful that they have procedures in place to prevent inadvertent violations.

See: SEC Order; SEC Press Release.See also: SEC Risk Alert on Rule 105 Compliance; SEC Press Release: Crackdown on Potential Manipulation in Advance of Stock Offerings.