Options trader pays $2mn for illegal short selling
29 December 2011 Chicago
Image: Shutterstock
An options trader in the Chicago area agreed to pay more than $2 million to settle SEC charges alleging he violated the "locate" and "close out" requirements of RegSHO.
According to the SEC, Gary Bell improperly relied on a market maker exception because he was not engaging in "bona-fide market making activities" in the securities he was borrowing.
George Canellos, director of the SEC's New York regional office, said, "Bell avoided the cost of borrowing shares while engaging in complex short selling transactions, thus earning significant profits with minimal risk and gaining an advantage over legitimate participants in the market. We'll continue aggressively to pursue and punish abusive short sellers who attempt to circumvent regulatory requirements to make more money."
The SEC found that Bell effected illegal naked short sales from December 2006 to June 2007 while working as a broker-dealer himself and then later as the principal trader at Chicago-based broker-dealer GAS. The transactions in question created the false appearance of compliance with the requirements of US regulation RegSHO, while in reality there was no delivery of shares.
Bell has settled the SEC's administrative proceedings without admitting or denying the US regulator's findings.
According to the SEC, Gary Bell improperly relied on a market maker exception because he was not engaging in "bona-fide market making activities" in the securities he was borrowing.
George Canellos, director of the SEC's New York regional office, said, "Bell avoided the cost of borrowing shares while engaging in complex short selling transactions, thus earning significant profits with minimal risk and gaining an advantage over legitimate participants in the market. We'll continue aggressively to pursue and punish abusive short sellers who attempt to circumvent regulatory requirements to make more money."
The SEC found that Bell effected illegal naked short sales from December 2006 to June 2007 while working as a broker-dealer himself and then later as the principal trader at Chicago-based broker-dealer GAS. The transactions in question created the false appearance of compliance with the requirements of US regulation RegSHO, while in reality there was no delivery of shares.
Bell has settled the SEC's administrative proceedings without admitting or denying the US regulator's findings.
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