Two London investment firms and their principal trader will pay $1.8 million (1.23 million EUR) fine for improper use of shares obtained in public offerings to cover short sales during a restricted period.
Robert B. Kaplan, an SEC lawyer of Armstrong Capital Ltd, and Bay Capital Investment Ltd. and Timothy M. Bliss, the companies' owner and principal trader, neither admitted nor denied wrongdoing in agreeing to settle for disgorgement, civil penalties and prejudgment interest.
In a settled complaint filed in federal court in Manhattan, the SEC alleged the companies and Bliss made illicit profits in excess of $1.26 million (860,000 EUR) as a result of the improper trading.
The SEC claims the companies violated a rule that prohibits covering of a short sale with securities purchased in a public offering if the short sale occurred during a restricted period.
and Bay Capital allegedly used shares purchased from an underwriter, broker or dealer in 57 public offerings between January 2004 and June 2006 to cover short sales that occurred in the five business days before the pricing of those offerings, the SEC said.
Bliss allegedly made all of the investment decisions for Armstrong Capital and Bay Capital and directed all of the trading at issue, the SEC said.
A lawyer for Bliss and the companies did not immediately return a phone call seeking comment Thursday.
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