The Ontario Teachers’ Pension Plan and 21 other firms have settled short-selling charges by the Securities and Exchange Commission (SEC).
On four occasions—from July 2010 through February 2011—the SEC alleges that Teachers’ bought offered shares from an underwriter, broker or dealer participating in a follow-on public offering after having sold short the same security during the restricted period.
Those actions violated the SEC’s Rule 105 of Regulation M, which prohibits the short sale of an equity security during a restricted period—generally, five business days before a public offering—and the purchase of that same security through the offering.
“The benchmark of an effective enforcement program is zero tolerance for any securities law violations, including violations that do not require manipulative intent,” says Andrew J. Ceresney, co-director of the agency’s division of enforcement.
“Through this new program of streamlined investigations and resolutions of Rule 105 violations, we are sending the clear message that firms must pay the price for violations while also conserving agency resources.”
The SEC alleges that Teachers’ violations of the rule resulted in profits of US$144,898.
As a result of the settlement, the pension fund will pay back the profits, plus interest of $11,642.90 and a civil money penalty of $68,295 for a total of $224,835.90.
The enforcement actions are being settled by 22 of the 23 firms charged, resulting in more than $14.4 million in monetary sanctions.
Only one of the 23 firms charged, G-2 Trading, is fighting the charges.
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