United States SEC Fines Top Hedge Fund Founder & Billionaire Ken Griffin Broker-Dealer Citadel Securities $7 Million for Marking Millions of Orders Wrongly with Short Sales as Long Trades & Long Trades as Short Sales, Failing to Provide Accurate Data to Regulator to Monitor Incidents Including Naked Short Selling
23rd September 2023 | Hong Kong
The United States Securities & Exchange Commission (SEC) has fined top hedge fund founder & billionaire Ken Griffin broker-dealer Citadel Securities $7 million for incorrectly marking millions of orders with short sales as long trades & long trades as short sales, failing to provide accurate data to regulator to monitor incidents including naked short selling. Ken Griffin is the founder of hedge fund Citadel with $62 billion AUM (Assets under Management) and has a personal fortune of more than $32 billion. United States SEC: “The Securities and Exchange Commission today announced settled charges against broker-dealer Citadel Securities LLC for violating a provision of Regulation SHO, the regulatory framework designed to address abusive short selling practices, which requires broker-dealers to mark sale orders as long, short, or short exempt. These records are routinely used by regulators in policing prohibited short selling activity. To settle the SEC’s charges, Miami-based Citadel Securities agreed to pay a $7 million penalty. According to the SEC’s order, for a five-year period, it is estimated that Citadel Securities incorrectly marked millions of orders, inaccurately denoting that certain short sales were long sales and vice versa. The SEC’s order finds that the inaccurate marks resulted from a coding error in Citadel Securities’s automated trading system and that the firm provided the inaccurate data to regulators, including the SEC during this period.”
“ United States SEC Fines Top Hedge Fund Founder & Billionaire Ken Griffin Broker-Dealer Citadel Securities $7 Million for Marking Millions of Orders Wrongly with Short Sales as Long Trades & Long Trades as Short Sales, Failing to Provide Accurate Data to Regulator to Monitor Incidents Including Naked Short Selling “
Mark Cave, Associate Director of the SEC’s Division of Enforcement: “Compliance with the order marking requirements of Reg SHO is a key component of regulatory efforts to curtail abusive market practices, including ‘naked’ short selling. This action against Citadel Securities demonstrates that a broker-dealer’s failure to comply with the requirements of Reg SHO can have negative downstream consequences on the accuracy of the firm’s electronic records, including its electronic blue sheet reporting, depriving the Commission of important information about the markets it regulates.”
United States SEC Fines Top Hedge Fund Founder & Billionaire Ken Griffin Broker-Dealer Citadel Securities $7 Million for Marking Millions of Orders Wrongly with Short Sales as Long Trades & Long Trades as Short Sales
22nd September 2023 – The Securities and Exchange Commission today announced settled charges against broker-dealer Citadel Securities LLC for violating a provision of Regulation SHO, the regulatory framework designed to address abusive short selling practices, which requires broker-dealers to mark sale orders as long, short, or short exempt. These records are routinely used by regulators in policing prohibited short selling activity. To settle the SEC’s charges, Miami-based Citadel Securities agreed to pay a $7 million penalty.
According to the SEC’s order, for a five-year period, it is estimated that Citadel Securities incorrectly marked millions of orders, inaccurately denoting that certain short sales were long sales and vice versa. The SEC’s order finds that the inaccurate marks resulted from a coding error in Citadel Securities’s automated trading system and that the firm provided the inaccurate data to regulators, including the SEC during this period.
The order charges Citadel Securities with violating Rule 200(g) of Reg SHO. Without admitting or denying the findings, Citadel Securities consented to a cease-and-desist order imposing a censure, a $7 million penalty, and a set of undertakings, including a written certification that the coding error has been remediated and a review of the firm’s computer programming and coding logic involved in processing relevant transactions.
The SEC’s investigation was conducted by Seth M. Nadler of the SEC’s Home Office. Christopher Ray of the SEC’s Division of Trading and Markets; Elcin Yildirim, Alan Lenarcic, and Peter Csatorday of the SEC’s Division of Examinations; Mandy Sturmfelz of the SEC’s Market Abuse Unit; Damon Taaffe and Melissa Armstrong of the Home Office Trial Unit; and Kevin Gershfeld and Robert Nesbitt of the Enforcement Division’s Office of Investigative and Market Analytics provided assistance. The investigation was supervised by Mr. Cave.
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