SEC Releases | SEC Enforcement Action
On August 17th, 2021, the SEC announced that they charged an Investment Adviser and its Associated Individuals for providing inaccurate order-marking information that ended up causing executing brokers to violate Regulation SHO. The charges were settled from the Investment Advisers Principal and their Trader for causing a dealer to fail to register with the SEC.
This order found evidence from June 2016 through October 2017. The following issues were found:
- False order-marking information on hundreds of sales orders of their hedge fund client to the hedge fund’s brokers.
- This caused the brokers to miswrite the hedge funds’ sales as “long”.
- The Investment Adviser and its Principal caused the hedge fund to engage in dealer activity without registering with the SEC.
- The Hedge Fund violated dealer registration requirements of the Securities Exchange Act of 1934.
The final results of this charge are:
- Agreement to cease-and desist orders, which was without admitting or denying the findings.
- The Investment Adviser and its Principal agreed to pay, jointly and severally, disgorgement of $7,000,000, with prejudgment interest of $1,078,183.
- Additional pay penalties issued to the Investment Adviser, its Principal, and its Trader of $800,000, $75,000, and $25,000.
- Agreement between the Investment Adviser and its Principal to establish future compliance with Regulation SHO.
To learn more about this SEC Enforcement Action click here!
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