Broker-Dealer Settles FINRA Charges for Overreporting Short Interest Position Shares

A broker-dealer settled FINRA charges for overreporting the number of shares associated with its short interest positions.

In a Letter of Acceptance, Waiver and Consent, FINRA stated that the broker-dealer's short interest reports included transactions that did not conform with the definition of a short sale under Rule 200(a) of Regulation SHO. FINRA stated that the broker-dealer overreported the total amount of shares associated with its short interest positions by about 697 million shares. FINRA added that the broker-dealer also failed to maintain supervisory procedures to achieve compliance with short interest reporting requirements.

FINRA determined that the broker-dealer violated FINRA Rule 4560 ("Short-Interest Reporting"), Rule 3110 ("Supervision") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to (i) a censure and (ii) pay a $250,000 fine.