Two firms agreed to pay a combined $60,000 to settle FINRA charges they violated Regulation SHO on short sales orders they accepted and/or transacted. 

    Citadel Securities LLC (Chicago, IL) was fined $45K.   Firm allegedly:  (i) effected short sales ("SS") and failed to report each one with short sale modifier.  (ii) improperly marked SS orders as SSE (exempt), which was incorrectly reported as such to the NASD/Nasdaq TRF.  (iii) effected long sale transactions that were incorrectly reported with a SS modifier.   WSP shortcomings:  re: registration & qualifications; trades reported on firm’s behalf; order marking; prop sales, specifically, accurate trade reporting of prop SS's. 

    Collins Stewart LLC (New York, NY) was fined $25Km ordered to pay restitution of $56, and revise its WSP - i.e., WSP shortcomings:   (i) order handling (SEC Rules 605, 606), best ex (principal trades), trade reporting, sales transactions (SS's, SS reporting), and MPIDs. 

Firm allegedly:  (i) accepted SS orders in an equity security from another person, or effected a SS in an equity security for its own account, affirmatively determining it could deliver the security on due date;  (ii) documenting compliance with SEC Rule 203(b)(1) of Reg. SHO.   (ii) failed to provide written disclosure to customers about its correct capacity in a trade. 

(iii) transmitted OATS reports that were inaccurate, incomplete or improperly formatted - in that the firm failed to submit “Cancel Replace” reports, reported non-reportable transactions to OATS and failed to submit certain reports for one of its MPIDs. 

(iv) traded for its own account at prices that would have satisfied customer market orders, then failed to immediately execute those orders, or to execute the orders up to the size and at the same price at which it traded for its own account, or at a better price.

For all cases, click onto:  [ FINRA Disciplinary Actions for November 2010 ]