December 16, 2016

The SEC announced on-going cease and desist proceedings against Utah-based broker dealer Wilson-Davis & Co, and settled proceedings against a former Wilson-Davis proprietary trader, Anthony Kerrigon, Wilson-Davis’ vice president/head trader Byron Barkley, and Wilson-Davis’ Chairman/CEO Paul Davis for violations of Regulation SHO.  Regulation SHO requires that before a broker-dealer effects a short sale, the broker-dealer must “locate” a source of borrowable securities that can be delivered on the date that delivery is due.  The rule includes a limited exception for short sales executed in connection with bona fide market making.  The SEC alleges that from at least November 2011 to May 2013, Wilson-Davis relied on the bona-fide market making exception for all short sales by its proprietary trading group and that this reliance was improper for certain trades.  While improperly availing itself of the exception, Wilson-Davis engaged in numerous short sales in over-the-counter equity securities which violated Rule 203(b)(1) of Regulation SHO and resulted in improper trading profits.  In addition, Wilson-Davis violated various provisions of the Market Access Rule.  Kerrigone, Barkley, and Davis will pay, collectively, over $700,0000 to settle the charges against them.  SEC

Tagged in: Market Manipulation and Trading Violations, Regulatory Violations,