Credit Suisse Fined $1.75 Million for Breaking ‘Naked’ Short-Selling Rules
Eleazar David Meléndez, 27 December 2011
The Financial Industry Regulatory Authority (FINRA) said Monday it was fining the American brokerage unit of Swiss banking giant Credit Suisse $1.75 million for violating rules regarding the controversial market-making practice known as “naked” short-selling.
Credit Suisse Securities (USA) LLC was being fined for violating Regulation SHO, a rule enacted in early 2005 by the Securities Exchange Commission to target prevent market participants from abusing short-selling, according to a statement from the regulatory group,
In a short sale, a market maker sells a security it does not own, later borrowing the instrument from a third-party in order to make good on its transaction. If the price of that security goes down, the short-seller can later buy it back in the open market, returning it to the party from which it borrowed in the first place, and pocketing the difference in prices as profit. Continue reading “Article: Credit Suisse Fined $1.75 Million for Breaking ‘Naked’ Short-Selling Rules”
