D.E. Shaw among 23 firms accused by SEC over short-sale claims

D.E. Shaw & Co., the $30 billion hedge fund, was among 23 investment firms accused by U.S. regulators of improperly buying shares of companies they had bet against days earlier.

The Securities and Exchange Commission, in administrative actions announced today, said the firms violated rule 105, which prohibits taking part in a public offering after selling the stock short during a restricted period prior to the pricing of the sale. The actions are being settled by 22 of the 23 firms for a total of more than $14.4 million, the SEC said.

Rule 105 helps prevent short selling that can reduce the proceeds received by companies by depressing the market price shortly before the company prices its public offering. Firms that violate the rule typically reap illicit profits by buying the shares at an artificially low price, the SEC said.

“The benchmark of an effective enforcement program is zero tolerance for any securities law violations, including violations that do not require manipulative intent,” Andrew Ceresney, co-chief of SEC enforcement, said in a statement.

D.E. Shaw, based in New York, agreed to pay about $667,000 to resolve the claims without admitting or denying wrongdoing.


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