Citadel founder and CEO Kenneth Griffin.
Andrew Harrer | Bloomberg | Getty Images
WASHINGTON — The Securities and Exchange Commission fined Citadel Securities, an investment management firm, $7 million for settling charges of violating order marking requirements, the commission announced Friday.
The SEC estimated that the firm marked thousands and thousands of certain short sale orders as long sales, and vice versa, from September 2015 through September 2020, in line with the commission.
The source of the inaccuracies was a coding error in Citadel’s automated trading system during this timeframe, the SEC found.
A Citadel spokesperson told CNBC that the matter “had no impact on the standard of our client execution.”
“While updating our systems to accommodate certain client requests, we made a coding change that inadvertently affected a de minimis percentage of our order markings,” the spokesperson added. “We detected the problem and promptly fixed it greater than three years ago.”
Short sales involve borrowing stock from a broker to sell into the market, then buying it back at a less expensive price and returning the borrowed stock to money in on the value difference, in line with Bankrate.
Compliance with order marking requirements “is a key component of regulatory efforts to curtail abusive market practices, including ‘naked’ short selling,” Mark Cave, associate director of the SEC’s Division of Enforcement, said in a press release.
Failures to comply “can have negative downstream consequences on the accuracy of the firm’s electronic records, including its electronic blue sheet reporting, depriving the Commission of necessary information concerning the markets it regulates,” Cave added.
The SEC also fined Goldman Sachs on Friday for inaccurate “blue sheet” submissions containing identifying securities trading information.
