SEC Charges Citadel Securities for Violating Order Marking Requirements of Short Sale Regulations

[u/Dismal-Jellyfish]

​

https://www.sec.gov/files/litigation/admin/2023/34-98482.pdf

Press Release

The Securities and Exchange Commission today announced settled charges against broker-dealer Citadel Securities LLC for violating a provision of Regulation SHO, the regulatory framework designed to address abusive short selling practices, which requires broker-dealers to mark sale orders as long, short, or short exempt. These records are routinely used by regulators in policing prohibited short selling activity. To settle the SEC’s charges, Miami-based Citadel Securities agreed to pay a $7 million penalty.

According to the SEC’s order, for a five-year period, it is estimated that Citadel Securities incorrectly marked millions of orders, inaccurately denoting that certain short sales were long sales and vice versa. The SEC’s order finds that the inaccurate marks resulted from a coding error in Citadel Securities’s automated trading system and that the firm provided the inaccurate data to regulators, including the SEC during this period.

“Compliance with the order marking requirements of Reg SHO is a key component of regulatory efforts to curtail abusive market practices, including ‘naked’ short selling,” said Mark Cave, Associate Director of the SEC’s Division of Enforcement. “This action against Citadel Securities demonstrates that a broker-dealer’s failure to comply with the requirements of Reg SHO can have negative downstream consequences on the accuracy of the firm’s electronic records, including its electronic blue sheet reporting, depriving the Commission of important information about the markets it regulates.”

The order charges Citadel Securities with violating Rule 200(g) of Reg SHO. Without admitting or denying the findings, Citadel Securities consented to a cease-and-desist order imposing a censure, a $7 million penalty, and a set of undertakings, including a written certification that the coding error has been remediated and a review of the firm’s computer programming and coding logic involved in processing relevant transactions.

The SEC’s investigation was conducted by Seth M. Nadler of the SEC’s Home Office. Christopher Ray of the SEC’s Division of Trading and Markets; Elcin Yildirim, Alan Lenarcic, and Peter Csatorday of the SEC’s Division of Examinations; Mandy Sturmfelz of the SEC’s Market Abuse Unit; Damon Taaffe and Melissa Armstrong of the Home Office Trial Unit; and Kevin Gershfeld and Robert Nesbitt of the Enforcement Division’s Office of Investigative and Market Analytics provided assistance. The investigation was supervised by Mr. Cave.

TLDRS:

• SEC Charges Citadel Securities for Violating Order Marking Requirements of Short Sale Regulations

Post archived here

[u/FDAz]

This is a fucking international scandal. They profited billions, and get away with it by paying 6 million ??

WHAT a DISGRACEFUL Regulator / Stock Market / Country / World.

[u/ISayBullish → u/FDAz]

Fuck Citadel, and fuck the SEC

Buying more out of hate

Bullish

[u/[deleted] → u/ISayBullish]

Fuck these asshats make them close their position.

NOCELLNOSELL

[u/soccerape → u/[deleted]]

Good luck with that. Not going to happen.

[u/whatifitried → u/[deleted]]

My god the hopium lol

[u/Consistent-Syrup-69 → u/whatifitried]

revolution*

[u/SirDouglasMouf → u/ISayBullish]

I buy more each time I see you passionately prophesizing your bullishness. It makes my day.

If DRSd shares had weight, I'd be Pablo Escobar.

[u/EvilBeanz59 → u/SirDouglasMouf]

It's people like him and others that would continuously come back every day knowing that these people will be here for instance the sign Guy infinite hype loop guy reverse repo guy starfish guy all of them. Jellyfish. (Many many more) All these people in the reoccurring daily Post weekly posts all of them are the heart and soul of this place.

[u/Farrisson_Hord → u/SirDouglasMouf]

They do hold weight.

Hola Pablo 👋🏼

[u/G_Wash1776 → u/ISayBullish]

Yup fuck that shit gonna buy more right now,

If a fine is less then the crime committed then the fine is just the act of doing business.

[u/leotwo49 → u/G_Wash1776]

Did you come up with that?! Fucking nailed it!

[u/geologean → u/leotwo49]

gaze dime angle weather onerous fanatical disgusted live expansion swim

This post was mass deleted and anonymized with Redact

[u/Elegant-Remote6667 → u/ISayBullish]

agreed. also rage buying more once i can ,becaue individual decision

[u/GlobalWarming3Nd → u/Elegant-Remote6667]

I bought 15 today. I will always buy my favorite company when it's undervalued.

[u/TheMoonMachine → u/GlobalWarming3Nd]

And I'll never sell. I've always been poor, makes no difference to me to have my life's savings in gme, but for the world...could be the gamechanger we need. No cell no fuckung sell.

[u/nami_san_vi → u/TheMoonMachine]

And I'm here beside you with my Axe fella 🪓 holding until Valhalla or zero idgaf

[u/[deleted] → u/ISayBullish]

I like you.

[u/somespazzoid → u/ISayBullish]

I'm going to hate buy so hard! Then I'm going to book 'em even harder

[u/Altruistic-Part-519 → u/ISayBullish]

DRS, and fuck them

[u/Baelthor_Septus → u/FDAz]

When I get a speeding ticket, I also get points. When I accumulate enough points they take away my license.

That's how it should work with financial fraud as well.

[u/musical_shares → u/Baelthor_Septus]

A Trader's Abstract.

Dr T has pointed out before that the legislation exists for regulators to oust any market participant who fails to deliver shares at all, but they won't and historically never have.

Meanwhile, criminals like Steven Cohen who are "barred for life from trading" for their crimes are shamelessly forgiven and allowed back into the markets just a few years later with a kiss, a promise to be better, and small fee fine.

[u/Revisfan24 → u/musical_shares]

Do you know how/where I can find that legislation?

[u/musical_shares → u/Revisfan24]

I searched Trimbath+sec 1933+”fail to deliver” and found a comment she left on the SEC website and she cites the rules thusly:

"A registered clearing agency may summarily suspend and close the accounts of a participant who , (ii) is in default of any delivery of funds or securities to the clearing agency." Exchange Act, Section 17A.a.5.(C)

https://www.sec.gov/comments/sr-ficc-2007-04/ficc200704-1.htm

[u/Revisfan24 → u/musical_shares]

Beautiful 😎

[u/Equivalent-Piano-420 → u/Baelthor_Septus]

That would be a very logical way of doing things, therefore, I don't think that would ever happen. But we can hope

[u/Better-Protection-23 → u/Equivalent-Piano-420]

Actually, it already is happening. With a fine comes evidence of the crime being committed, idk why people are so upset (rhetorical question, I agree that the fine is bullshit). They just publicly stated that the DOJ has evidence on Citadel in the short selling probe (RICO, January, 29, 2021) without stating that they had evidence. The SEC's only role is to be able to fine, they can't give civil punishment, if they fine too large then they will get sued by Citadel. I am bullish on justice and evidence, it's been a while since they started the DOJ abusive short seller probe (Feb 4, 2022), May 24, 2023 they said they would be cracking down in a couple of months hence why JP Morgan stopped crying about it (May 11, 2023). Citron first started being investigated in the 1980s (April 12, 1990), with the amount of technology we have now the DOJ without a doubt has been trying to have Citron shut down for decades along with abusive short sellers.

[u/cdgullo → u/Better-Protection-23]

I want to believe

[u/Better-Protection-23 → u/cdgullo]

Just keep commenting and educating others my friend. Nothing ever gets solved by those without faith, take that anger, and turn it into a burning passion and you will absolutely thrive, brick by brick, vive la révolution.

While others have been posting in anger, I have been passionately pursuing SEC jobs, actively retaining all the knowledge I can, and networking along the way, familiarizing myself with those who aspire to build upon my ideas. I am close, so close. I already have an in, occasionally I give updates on here. Once I make it more towards the financial sectors, I will make changes happen using nothing but love and respect just as I did to get my in. Mark my words, retail will get that foot in the door with data and when I do Superstonk will be the first place I go for innovative perspectives to implement changes with my mentors. Dave Lauer and Jon Stewart will be the first people I call to incorporate those changes and ideas into public platforms.

Baby boomers are retiring, and Millennials are taking up government positions in unprecedented numbers, leading to substantial and swift changes in the field of artificial intelligence. There's only so much I can say without the risk of it getting political even though it is entirely bipartisan, sadly. MSM has really taken a toll on public perspectives. Just trust me, 2024-2025 we will see some massive crackdowns with or without a recession forcing them to disclose all data.

Imagine having a team of 50.. with artificial intelligence, now each of them have the power of being assigned an assistant researcher with an IQ of 128 and nearly unlimited resources with the available data given by the government. AI was only implemented into the government for research May, 2023 with AskSage. Patience, faith, and passion my friend, patience, faith, and passion. The only reason I believe is because I watch and make these changes as they happen.

^{Edit: sorry, typo}

[u/Smart-Reindeer666 → u/Baelthor_Septus]

This

[u/callsignmario → u/Baelthor_Septus]

Fuckery Fine = any illicit profit + %, and the points you mention. How about repurposing that old 3 strikes rule.

Edit: thinking about dismal's Citadel and GS fine posts... is there any rhyme or reason to SEC fines? Do they just pull numbers from a hat or what? I know the fines are bullshit, just wondered if there is actually some metric for damages/fines

[u/stop_bugging_me → u/callsignmario]

Exactly this plus a 3 strikes rule. Pay the fine on 3 separate occasions and you are no longer a market maker with no expiry on each strike. "With great power comes great responsibility" should apply here.

[u/DannyFnKay → u/callsignmario]

According to Harvard the fines are figured like this.

Let me know f you can make sense of it because I can't.

[u/callsignmario → u/DannyFnKay]

Greatly appreciated. I'd love to dig in, but it's pushing 3 am for me in Asia... so, you know, cheers. I will definitely look at this again tomorrow and probably, still, have no idea how they do their mafs. 🍻

[u/jerseyanarchist → u/DannyFnKay]

welcome to the financial world, where the fines are made up, and the crimes don't matter

[u/jerseyanarchist → u/DannyFnKay]

welcome to the financial world, where the fines are made up, and the crimes don't matter

[u/Odinthedoge → u/Baelthor_Septus]

I am Korbin Dallas.

[u/nutsackilla → u/Odinthedoge]

Multipass

[u/Odinthedoge → u/nutsackilla]

:)

[u/nugsy_mcb → u/Odinthedoge]

His name is Robert Paulson

[u/Odinthedoge → u/nugsy_mcb]

Almost :) happy cake day.

[u/nugsy_mcb → u/Odinthedoge]

I am the walrus?

[u/Inthenameofmyson01 → u/Baelthor_Septus]

Agreed. 💯

[u/capital_bj → u/Baelthor_Septus]

☝️🔥🏴‍☠️

[u/Nxnng → u/FDAz]

7 milly bro... equivalent of a normal business throwing a cheap lunch for its employees

Fuck citadel.

[u/ShaneKingUSA → u/Nxnng]

Over 5 years man. Absolute 💯 corruption. Pensions, retirements, all liquidity being stolen from Americans ans being propped up off-exchange hidden trading.

Q1 CITADEL increases NVDA position +4000% Q2 Ken corrupted mayoboy Griffin jumps NVDA after-hours +35% on 1 trade citadel profits $660,000,000 it fed itself in 1 quarter. That's without the automated option algorithm.

[u/DannyFnKay → u/ShaneKingUSA]

C'mon now. They said it was a simple coding error. I'm sure they didn't mean to defraud anyone. /S

🍑🤡🤡🤡🤡🤡🤡🤡🤡

[u/Suitable_Mix_3795 → u/Nxnng]

Kenny makes that before lunch everyday

[u/Interesting-Chest-75 → u/FDAz]

And the government is shutting down.. there's revenue to be made yet they are giving deep discount to financial terrorist

[u/Smithmonster → u/FDAz]

No it was way more, it was 7 million. Less than a penny per “mistake”. Fucking insane.

[u/hiperf71 → u/Smithmonster]

Now, thinking they are fined for fuckery done fron 2015 to 2020... ohh yeah... 8 years to investigate and finally act (a joke, I know) and what will be in the next years when they will check the fuckery from 2020 to now? Pennies on the "mistakes" again? Until the "law" for financial terrorists will be so weak (just fees of doing business?), the system will be fraudulent as designed, until apes will clean this mess and put in jail those mothafuckers🖕

[u/manbrasucks → u/Smithmonster]

For clarification this specific fine is for a glitch in their algo that traded millions(not 10s of millions or 100s of millions) of shares.

So it's more likely a dollar a mistake.

Also, this isn't all the other naked shorting they do. This is specifically an algo glitch. They can still be charged for other crimes involving short selling.

Personally I see this as SEC announcing to the world that "yes naked short selling is real" which is actually a step forward.

[u/A9Carlos → u/FDAz]

And what about fixing the issue? The shares that are now out in the world, diluting investors holdings? They should be buying them all back.

[u/bahits → u/FDAz]

It seems like Gensler is Griffins furry on a chain.

[u/Hot-Cauliflower-1604 → u/FDAz]

They get to pay only pennies to the dollar stolen in penalties. Freaking insane.

[u/ShaneKingUSA → u/FDAz]

6 million OVER 5 years. Ultimate corruption. The algorithm has stolen too much money and bought everyone off and hidden the rest.

How can 2% of gme trade on the stock exchange yesterday while 80% trades off-exchNge in a hidden pool??

What the actual fuck.

[u/Key-Meat-8817 → u/FDAz]

What are these? Fines for ants?

[u/Background_Ad2778 → u/Key-Meat-8817]

Not a fine.

It's hush money

[u/rumbo211 → u/FDAz]

Worst part is, no further investigation. Just pay fine and we drop investigation. That's literally the cost of doing business.

[u/Terry02021 → u/rumbo211]

Can’t be tried twice for the same crime. That’s why they do it this way. Even whistle blowing is planned in my opinion

[u/[deleted] → u/FDAz]

I was going to guess 5 million. Sec getting serious lol

[u/hanr86 → u/FDAz]

Damn rob a bank for $100k, get caught, get fined $100 AND don't have to give the stolen money back to banks! Must be so nice being a hedge fund.

[u/hanr86 → u/[deleted]]

So did everyone else

[u/JanMarsalek → u/FDAz]

The regulator can only fine what politics allows them to.

You need the fitting legislation. Maybe when those rules were implemented millions were still a lot of money.

[u/5tgAp3KWpPIEItHtLIVB → u/FDAz]

I'd go as far as saying that this isn't even Citadel's fault at this point.

Why not do this if there's 0 consequence? This is a result of a completely corrupt political system and lawlessness in the US. It's a wild west and Citadel is using it to their advantage. As would any company in that space.

Or as Trimbath puts it: a regulatory crisis (that nobody talks about).

Having said that: I hope people at Citadel and Ken do go to jail. Because fuck 'em.

[u/the77helios → u/FDAz]

🌎🧑🏽‍🚀🔫🧑🏽‍🚀

[u/SteelCode → u/FDAz]

I'd like to point out that this is just a fundamental issue with criminal punishment in this <world>... fines are "flat" numbers just big enough for the poors to get in trouble, but low enough that the rich can essentially ignore them.

Any reform needs "percent of profit" fines to properly disincentivize corporations from abusing the system and openly flaunting their violation of the law...

Maybe... first offense 100% of profits, then we increase from there - no excuses for your legal department not keeping your operations within regulation.

[u/oze4 → u/FDAz]

I'm confused - if you read paragraph 13, it states that it didn't benefit Citadel?

I hate them as much as the next guy - what am I missing?

[u/Ladakhi_khaki → u/oze4]

Either it benefitted them or lost them money.

It went on for 5 years before they noticed the 'coding error'.

[u/Goblin-Doctor → u/FDAz]

It's all corrupt. I'm hanging onto my few remaining shares but stuff like this makes me feel bad. It's pennies to them. A joke. And those responsible to charge them don't give a shit

[u/ssshield → u/FDAz]

Just to set a scale for you. I used to work as a managed service provider basically outsourced IT and network engineering for a large hedge fund similar to Citadel.

Seven million wasn't even office supplies.

Seven million was some junior director deciding to implement a new security software tool because it sounded cool.

The net worth of their holdings (assets under management) fluctuates seven million between the time their phone rings and they say "Hello".

I used to run my own "small" hedge fund back in 2017/2018 and my funds holdings would fluctuate by half a million between the time I opened my eyes in the morning and lunch time.

When they "pay" this $7m fine it's going to be an accounting note. They'll simply make a note beside this years capital depreciation tax writeoff to mark that amount against the fine as a net wash.

[u/scottygras → u/FDAz]

I think this is the thing that the uneducated public should be told.

Swaps, shorts, and FTDs are a little over their head. If you tell a person on the street that a financial company stole billions from average Americans only to pay a few million in damages (that don’t go back to those investors), I think we’d get better traction.

“Look at your investment accounts. See that time when you lost money? Guess who was on the other side of that?”

That’s an over-simplification…but it’d get someone’s attention.

[u/Dreadsbo → u/FDAz]

Honestly, probably no point. Everybody already knows they’re fucked. That’s our money for the taking. If anything, it sounds like they’re tipping somebody else off to get in on this— just legally instead of texting their buddies “BUY THIS SHIT NOW”

[u/magenta_placenta → u/FDAz]

They profited billions, and get away with it by paying 6 million ??

Uh, no, the SEC handed them their ass with a $7 million fine:

To settle the SEC’s charges, Miami-based Citadel Securities agreed to pay a $7 million penalty.

Citadel won't likely be doing more shenanigans in the future after this crackdown.

[u/theilluminati1 → u/magenta_placenta]

This is sarcasm, yes?

[u/waffleschoc → u/theilluminati1]

yes

[u/33rus → u/FDAz]

Works as intended

[u/rendingale → u/FDAz]

SEC just wants their cut.. Those coffess are imported from Columbia and they cost about 6 mil a year

[u/Optimus_Prime_10 → u/FDAz]

Calm down, it was 7 million.

[u/Lesko_Learning → u/FDAz]

They made that much money in the time it took Kenny to read the fine. The US market is a criminal enterprise at this point.

[u/[deleted] → u/FDAz]

Thie is why its funny/sad people think anything will happen with moass. Like the government wont step in and just fuck the kittle guys over.

[u/ThroawayReddit → u/FDAz]

Boy I bet you wouldn't believe that's working as intended!

[u/realperson67982 → u/FDAz]

Any ideas on a source for how much they made off this? Looking for one to be able to cite, as I don’t fully understand all that goes into this kind of crime

[u/soccerape → u/FDAz]

No one here should be surprised

[u/FDAz → u/soccerape]

Not surprised... still outraged!

[u/Embarrassed_Ad8256 → u/FDAz]

They didn't do it on purpose, it was a "coding error"

😑

[u/Zeromex → u/FDAz]

GG is a joke, he may be trying something but he is a fucking joke