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SEC charges BNP Paribas Securities with Reg SHO

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cowtown jay Member Level  Tuesday, 06/30/20 09:16:48 AM
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SEC charges BNP Paribas Securities with Reg SHO violations

https://www.sec.gov/litigation/admin/2020/34-89177.pdf

"On the basis of this Order and Respondent’s Offer, the Commission finds
that

Summary

1. This matter concerns BNPP’s violations of Rule 203(a)(1) of Regulation SHO,
which prohibits lending shares to settle sale orders marked as “long.” From April 2016 through
July 2016, BNPP routinely loaned a hedge fund prime brokerage customer (the “Hedge Fund”)
securities on settlement date to settle purported “long” sales. These sale orders were all executed
away from BNPP at another broker-dealer (“Broker-Dealer A”) on behalf of the Hedge Fund."

None of the three Issuers who were impacted by this was SpongeTech. But, BNP Paribas was a participant in SpongeTech's market.

The SEC's response was also what they Ordered in the SpongeTech case.

"C. BNPP, shall, within 14 days of the entry of this Order, pay a civil money penalty in
the amount of $250,000 to the U.S. Securities and Exchange Commission. The Commission may
distribute civil money penalties collected in this proceeding if, in its discretion, the Commission
orders the establishment of a Fair Fund pursuant to 15 U.S.C. § 7246, Section 308(a) of the
Sarbanes-Oxley Act of 2002. The Commission will hold funds paid pursuant to this paragraph in an
account at the United States Treasury pending a decision whether the Commission, in its discretion,
will seek to distribute funds or, subject to Exchange Act Section 21F(g)(3), transfer them to the
general fund of the United States Treasury. If timely payment is not made, additional interest shall
accrue pursuant to 31 U.S.C.§3717."

Again, in my opinion, this is a conversion of investors' funds.

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