{"id":5472,"date":"2013-06-12T00:00:00","date_gmt":"2013-06-12T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2013\/06\/cboe_will_pay_6m_penalty_over"},"modified":"2022-05-04T14:14:31","modified_gmt":"2022-05-04T19:14:31","slug":"cboe-will-pay-6m-penalty-over","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/cboe-will-pay-6m-penalty-over\/","title":{"rendered":"CBOE Will Pay $6M Penalty Over SEC Charges Alleging Failure to Enforce Trading Rules"},"content":{"rendered":"

The Chicago Board Options Exchange, which is the largest options exchange in the United States, has consented to pay $6 million penalty to settle Securities and Exchange Commission charges accusing it of not fulfilling its obligation to enforce trading rules and failing to stop one firm member from engaging in abusive-short selling. The exchange is settling and taking corrective action but is not admitting to\/denying wrongdoing.<\/p>\n

While CBOE is an SRO (self-regulating organization), the SEC has wide oversight over trading. This is the first penalty that an exchange is paying for purported regulatory oversight failures. The Commission is also censuring the exchange, which means a tougher sanction could result if the alleged violation occurs again.<\/p>\n

According to the regulator, in 2008, CBOE transferred the monitoring of member firms\u2019 compliance via a rule for curbing abusive short-selling <\/a>practices to a different department. This, contends the SEC, hurt the exchange\u2019s ability to enforce the rule. (Short-selling involves a trader betting that a stock will drop in value. Short-sellers borrow the shares of a company, sell them, and then purchase them when the stock fails, giving them back to the lender while keeping the price difference. Unfortunately, too much short-selling focusing on weak companies can cause them to fail, inciting market volatility.)<\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

The Chicago Board Options Exchange, which is the largest options exchange in the United States, has consented to pay $6 million penalty to settle Securities and Exchange Commission charges accusing it of not fulfilling its obligation to enforce trading rules and failing to stop one firm member from engaging in abusive-short selling. The exchange is […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3760,3761,3973],"tags":[],"class_list":["post-5472","post","type-post","status-publish","format-standard","hentry","category-sec-enforcement","category-securities-and-exchange-commis","category-short-selling"],"yoast_head":"\nCBOE Will Pay $6M Penalty Over SEC Charges Alleging Failure to Enforce Trading Rules — Investor Lawyers Blog — June 12, 2013<\/title>\n<meta name=\"description\" content=\"The Chicago Board Options Exchange, which is the largest options exchange in the United States, has consented to pay $6 million penalty to settle — June 12, 2013\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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