Broker-Dealer Fined for Mismarking Short- and Long-Sale Orders

A broker-dealer settled charges with the SEC for mismarking millions of short- and long-sale orders.

In the Order, the SEC found that over a five-year period the broker-dealer mismarked short- and long-sale orders due to a software coding error used to compute the required position marking under Regulation SHO. The SEC stated that the coding error did not affect the broker-dealer's handling of the client orders, but that it did result in "intra-day inaccuracy in the [broker-dealer's] proprietary position" marking. The SEC found violations of Regulation SHO Rule 200(g) ("Definition of 'short sale' and marking requirements").

The SEC stated that upon discovery of the coding error during an internal compliance review the broker-dealer promptly addressed the issue. To settle the charges, the broker-dealer agreed to (i) cease and desist from any further regulatory violations, (ii) a censure and (iii) pay a civil money penalty of $7 million.