SEC Penalizes Citadel Securities LLC for Violating Regulation SHO

The Securities and Exchange Commission (SEC) announced settled charges against broker-dealer Citadel Securities LLC for violating a provision in Regulation SHO, which requires that sales orders be marked as either long or short. It is estimated that Citadel Securities incorrectly marked millions of orders resulting from a coding error in its automated trading system during a five-year period, leading to inaccuracies in the data presented to regulators. To settle the SEC’s charges, Citadel Securities agreed to pay a $7 million penalty, accept a censure, and take on a set of undertakings to certify remediation of the coding error and review relevant computer programming and coding logic. The investigation was conducted by the SEC's Home Office, Trading and Markets Division, Examinations Division, Market Abuse Unit, Home Office Trial Unit, and Enforcement Division's Office of Investigative and Market Analytics.