SEC 'taps' five for short selling trades


THE U.S. Securities and Exchange Commission has slapped a whopping $750,000 fine on five traders for short selling stock in violation of Rule 105.

In settlement proceedings before an SEC administrative panel (Wednesday 2 July 2014), the five employed at Long Island's Worldwide Capital Inc. relinquished all profits and agreed to pay fines for short selling restricted stock ahead of an initial public offer (IPO) which they then repurchased to generate turbo charged profits.

The SEC’s director of the New York Regional Office, Andrew M. Calamari, said: "These individuals shared in profits generated by transactions that violated important short selling regulations in place to protect the markets from manipulative trading activity.”

The five high rollers, Derek W. Bakarich, Carmela Brocco, Tina Lizzio, Steven J. Niemis, and William W. Vowell, worked for Jeffrey W. Lynn's Long Island outfit which had settled SEC charges last March, paying a staggering $7.2 million penalty for the Rule 105 violation.

The SEC's Amelia A. Cottrell, associate director at the NY Regional Office added: “When conducting these trades, these individuals did not comply with the law. Now they must forfeit the profits they earned on their respective trades plus additional penalties.”

Rule 105 prohibits the short selling of equity securities during a restricted period - typically five trading days ahead of a public offer and any repurchasing of that stock through the IPO.

Source: SEC Newsroom