SEC Charges Chicago-Based Broker-Dealer with Violations of Regulation SHO
Aug. 12, 2022
File No. 3-20961
August 12, 2022 - The Securities and Exchange Commission today announced settled charges against Chicago-based registered broker-dealer IMC Chicago, LLC ("IMC") for violations of Rule 203(b)(1) of Regulation SHO through its Single-Dealer Platform ("SDP").
The SEC's order finds that from approximately June 2017 through November 2020, IMC violated Regulation SHO by executing millions of short sale trades through the SDP while improperly relying on the bona-fide market making exception to the "locate requirement" for short sales in Rule 203(b)(2)(iii). The order finds that IMC did not qualify for the bona-fide market making exception to the locate requirement because it was not engaged in bona-fide market making on the SDP at the time of these short sales. The order finds that, among other things, IMC did not post continuous, firm quotations at or near the market on both sides, but instead posted indications of interest ("IOIs") that IMC said should not be considered to be bids or offers. The order also finds that the IOIs posted on the SDP by IMC included only the firm's current side and size in a particular symbol and did not include a price, and all orders submitted by the users of the SDP were immediate-or-cancel.
The SEC's order finds that IMC willfully violated Rule 203(b)(1) of Regulation SHO. Without admitting or denying the SEC's findings, IMC consented to a cease-and-desist order and a censure, and agreed to pay a civil money penalty of $125,000.
The SEC's investigation was conducted by Jamie Davidson and supervised by Anne C. McKinley of the SEC's Chicago Regional Office. Terry Moran, Ilan Felix, and Stephanie Fischer Bennett of the SEC's Division of Examinations, assisted with the investigation.