Saturday, May 22, 2010

Reg SHO

I'm up early on a Saturday doing my weekly visit to the FINRA website. I see that two broker-dealers have decided to provide me with real-world examples of Reg SHO violations, and pay a total fine of $925,000 to FINRA. Remember that Reg SHO requires broker-dealers to determine that actual securities are available to be borrowed and sold short before executing a short sale. Stock prices are based purely on supply and demand, so if short sellers get to sell phantom shares short, that artificially depresses the price of a stock and distorts the market.

I'll let you stretch a little bit by reading the news release yourself at:

http://www.finra.org/Newsroom/NewsReleases/2010/P121482

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