THE Securities and Exchange Commission's scrutiny of share short selling has netted the watchdog more than $9 million in penalties.
Regulation M's Rule 105 prohibits short selling of share stock within a five day period prior to an initial public offering.
The rule preserves the independent pricing mechanisms of stock and prevents an immediate offloading of shares to manipulate the market.
One broker and 19 firms fell foul of a Rule 105 breach and coughed up fines of varying amounts, with RA Capital Management of Massachusetts parting with more than $3.5M in penalties and interest.
Andrew Ceresney, The SEC's Director of Enforcement said: "These charges should remind investment advisers and others of the need for robust and comprehensive compliance programs covering Rule 105 compliance."
The SEC worked closely with FINRA in identifying short sellers, all of whom have been named and shamed on the SEC website.
Source: SEC Newsroom