Citadel Securities Fined $7M Fine for Coding Error

The U.S. Securities and
Exchange Commission (SEC) has announced that Citadel Securities has settled
charges of violating Regulation SHO, a law aimed at controlling
short-selling practices. This violation pertained to Citadel Securities’
alleged failure to accurately mark sale orders as long, short, or short exempt.

The SEC’s investigation
revealed a pattern of mismarked orders over five years, attributing
these inaccuracies to a coding error within Citadel Securities’ automated
trading system. During this time, the
firm mistakenly classified short sales as long sales and vice versa. Even more
concerning to the SEC was that Citadel provided this erroneous data
to regulatory authorities, including the SEC, without detection or correction.

Mark Cave, the
Associate Director of the SEC‘s Division of Enforcement, said: “This
action against Citadel Securities demonstrates that a broker-dealer’s failure
to comply with the requirements of Reg SHO can have negative downstream consequences
on the accuracy of the firm’s electronic records, including its electronic blue
sheet reporting, depriving the Commission of important information about the
markets it regulates.”

Citadel Securities
opted for a settlement
Settlement

Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer’s name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2

Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer’s name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2
Read this Term without admitting or denying the findings, by consenting to
a cease-and-desist order. The settlement terms include a censure, a penalty amounting to $7 million, and a series of undertakings aimed at rectifying…