22 firms paying $14.4M to settle SEC charges

22 investment firms paying total $14.4M to settle SEC charges of improper short-selling

Associated Press

WASHINGTON (AP) -- Twenty-two investment firms are paying a total of $14.4 million to settle federal charges of improperly short-selling certain stocks and buying them soon after in public offerings.

The Securities and Exchange Commission announced the settlements Tuesday. One of the best-known is the hedge fund D.E. Shaw & Co., which agreed to pay $465,986 in restitution plus interest and a $201,506 penalty.

Short-selling is a bet that a stock will lose value. Short-sellers borrow shares and agree to sell them in hopes that the share price will fall. They can then buy the shares at a lower price, return them to the lender and pocket the difference.

SEC rules prohibit short-selling a stock in the five business days before a public offering and then buying that stock in the offering.

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