(Bloomberg) -- Izzy Englander's Millennium Management agreed to pay more than $630,000 to settle a U.S. regulator's allegations that it illegally bought newly issued shares of companies that it had bet against.
On four occasions in 2012, the New York-based hedge fund firm invested in stock offerings of companies that it had just sold short, the U.S. Securities and Exchange Commission said in a Tuesday statement. Securities rules prohibit traders from using new shares to cover their short positions. The trades allowed Millennium to make almost $290,000 in illicit profits, the SEC said.
“Millennium established and maintained certain accounts that improperly participated in public offerings despite other firm accounts being short the relevant securities,” said Sanjay Wadhwa, senior associate director of the SEC's New York office.
In settling the case, Millennium didn't admit or deny the regulator's findings.
In a short sale, a trader borrows shares from their broker and then sells them. The hope is that the stock will decline and the trader can buy the shares back at a lower price. After returning the stock to their broker, they pocket the profits.
The SEC adopted a “zero-tolerance” policy on the short-selling rules in 2013. Since then, it says there has been a substantial decrease in the number of infractions.
To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net.
To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory Mott
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