SEC VS. CORMARK SECURITIES INC.,
21 December 2020
These proceedings concern Cormark’s role in repeatedly causing a U.S. executing broker (the “Executing Broker”) to violate the order-marking and locate requirements of Regulation SHO of the Exchange Act.
From August 2016 to October 2017 (the “relevant period”), Cormark entered more than 200 sale orders for a hedge fund customer (the “Hedge Fund”) into an intermediary broker’s execution management system as “long” orders.2 At the time these orders were entered, the Hedge Fund was not “deemed to own” the stock being sold and did not have a net long position in the stock. Thus, the orders should have been marked as “short” sales under Regulation SHO. The intermediary broker, ITG Canada Corp. (“ITG Canada”), routed the sale orders, with the incorrect order-marking information provided by Cormark, to the Executing Broker, which in turn executed the orders as “long” sales on U.S. exchanges. As a result, Cormark caused the Executing Broker to mismark sale orders as “long,” in violation of Rule 200(g) of Regulation SHO.
PDF (8 pages): SEC VS. CORMARK SECURITIES INC.,
