The US Securities and Exchange Commission (SEC) announced today that it has resolved charges against two Canadian-based broker-dealers, Cormark Securities and Virtu ITG Canada for a total of $1 million in penalties. The companies faced charges for providing incorrect order-marking information.
According to the official announcement by the SEC, Cormark and ITG Canada violated the Rule 200(g) of Regulation SHO by causing more than 200 sale orders from a single hedge fund, representing total sales of more than $660 million, to be mismarked as ‘long’.
Additionally, the order outlined that the two companies gave wrong information to the executing broker of the hedge fund. Without admitting or denying the SEC’s findings, Cormark and Virtu ITG Canada agreed to settle charges with penalties.
“The SEC’s order finds that Cormark and ITG Canada caused the executing broker‘s violations of Rules 200(g) and 203(b)(1) of Regulation SHO of the Securities Exchange Act of 1934. Without admitting or denying the findings, Cormark and ITG Canada each agreed to cease and desist from committing or causing any violations and any future violations of Rules 200(g) and 203(b)(1) of Regulation SHO. In addition, Cormark agreed to pay a penalty of $800,000, and ITG Canada agreed to pay a penalty of $200,000,” the Commission mentioned in the official order.
In 2020, the SEC ramped up its efforts to punish violators. In October, FortuneZ reported that the SEC imposed a penalty of $130,000 on Tradenet for the sale of unregistered security-based swaps to over 5,000 retail investors. Moreover, the SEC charged 7 people earlier this year for running boiler room schemes.
“The order further finds that it was not reasonable for Cormark or ITG Canada to rely on its customer’s assurances that the orders were properly marked ‘long’ because both brokers were on notice of the customer’s repeated failures to deliver the securities by the settlement date,” the SEC added.