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Broker-Dealer Settles FINRA Charges for Over-Tender of Shares Violations

A broker-dealer settled FINRA charges for failing to accurately calculate its net long position, leading to an over-tender of shares in excess of its net long position in a partial tender offer.

In a Letter of Acceptance, Waiver and Consent, FINRA found that the broker-dealer incorrectly applied the independent trading unit aggregation concept used in connection with short sales to SEA Rule 14e-4 ("Prohibited Transactions in Connection with Partial Tender Offers"), leading it to calculate its net long position on the basis of each independent aggregation unit rather than on the aggregate short and long positions of the firm as a whole. FINRA determined that the broker-dealer's conduct resulted in violations of SEA Rule 14e-4(b) and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to a (i) censure, (ii) $20,000 fine, paid jointly to NYSE Arca and NYSE American LLC (the "Exchanges") and to FINRA, and (iii) $713.06 disgorgement, paid jointly to the Exchanges and FINRA.

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Partial Tenders, Short Sales and Positions
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