Tuesday, September 18, 2007
On September 18, 2007, the SEC filed a settled civil action charging that Swiss Re Financial Products Corporation ("SRFP") violated Rule 105 of Regulation M by selling securities short within five business days before the pricing of following-on offerings and covering the short sales, in whole or in part, with shares purchased in the offerings. SRFP has agreed to settle the case, without admitting or denying the Commission's allegations, and has agreed to the entry of a final judgment directing it to pay a $95,000 penalty. In a related administrative proceeding, SRFP has consented, without admitting or denying the Commission's findings, to the issuance of a Commission order requiring it to cease and desist from causing or committing any violations and any further violations of Rule 105 of Regulation M and to pay disgorgement and prejudgment interest of $457,605.
The Commission's complaint, filed in federal court in Manhattan, alleges that over a period of approximately eighteen months, from mid-2003 until early 2005, in connection with thirteen public offerings by eleven issuers, SRFP engaged in short sales and covering transactions prohibited by Rule 105, and that SRFP profited on all but one of the thirteen transactions, realizing total profits of $380,517 on the profitable transactions. The complaint alleges that by engaging in this conduct, SRFP violated Rule 105 of Regulation M.