Investment advisory firm to pay more than $630,000 to settle charges
Investment advisory firm Millennium Management LLC has agreed to pay more than $630,000 to settle charges that it shorted U.S. stocks in companies planning follow-on offerings and then illegally bought shares in the follow-on offerings.
An SEC investigation found that Millennium violated an anti-manipulation provision of the federal securities laws known as Rule 105 on four occasions in 2012. Rule 105 prohibits short selling an equity security during a restricted period (generally five business days before a covered public offering) and then purchasing that same security through the offering. By illegally purchasing shares in the follow-on offerings, Millennium reaped $286,889 in illicit profits.
“Millennium established and maintained certain accounts that improperly participated in public offerings despite other firm accounts being short the relevant securities,” said Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office. “We will continue to actively surveil for, and charge, violations of Rule 105 where appropriate.”
Millennium must pay disgorgement of $286,889 plus interest of $51,820.11 and a penalty of $300,000 for a total of $638,709.11. Without admitting or denying the findings in the SEC’s order, Millennium agreed to cease and desist from violating Rule 105 in the future.
The SEC’s investigation was conducted by Nathaniel I. Kolodny, Elizabeth Butler, and Thomas P. Smith Jr. The case was supervised by Mr. Wadhwa.