Investment Adviser Settles SEC Charges for Short Selling Rule Violations

An investment adviser settled SEC charges for entering into short positions in seven public offerings during a restricted offering period in advance of stock offerings.

In the Order, the SEC found that the adviser improperly short sold American Depository Receipts of various companies within the restricted period and then purchased the same securities in a covered offering. As a result, the SEC found that the adviser violated Rule 105 of Regulation M ("Short selling in connection with a public offering").

To settle the charges, the adviser agreed to (i) a cease-and-desist and (ii) pay $6,508,793 in disgorgement, $190,211 in prejudgment interest and a civil monetary penalty of $200,000.