Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

A Member of the Law Professor Blogs Network

Wednesday, December 28, 2011

FINRA Fines Credit Suisse for Reg SHO Violations

FINRA recently fined Credit Suisse Securities (USA) LLC $1.75 million for violating Regulation SHO (Reg SHO) and failing to properly supervise short sales of securities and marking of sale orders. As a result of these violations, Credit Suisse entered millions of short sale orders without reasonable grounds to believe that the securities could be borrowed and delivered and mismarked thousands of sales orders.

FINRA found that from June 2006 through December 2010, Credit Suisse's Reg SHO supervisory system regarding locates and the marking of sale orders was flawed and resulted in a systemic supervisory failure that contributed to significant Reg SHO failures across its equities trading business. During the time period, Credit Suisse released millions of short sale orders to the market without locates, including threshold and hard to borrow securities. The locate violations extended to numerous trading systems, aggregation units and strategies. In addition, Credit Suisse mismarked tens of thousands of sale orders in its trading systems. The mismarked orders included short sales that were mismarked as "long," resulting in additional violations of Reg SHO's locate requirement.

In concluding this settlement, Credit Suisse neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

http://lawprofessors.typepad.com/securities/2011/12/finra-fines-credit-suisse-for-reg-sho-violations.html

Other Regulatory Action | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef01543916a39c970c

Listed below are links to weblogs that reference FINRA Fines Credit Suisse for Reg SHO Violations:

Comments

Post a comment