Citadel establisher and CEO Kenneth Griffin.
Andrew Harrer | Bloomberg | Getty Images
WASHINGTON — The U.S. Securities and Exchange Commission fined Citadel Guardings LLC $7 million for settling charges of violating order marking requirements, the commission announced Friday.
The SEC estimated that the organization marked millions of certain short sale orders as long sales, and vice versa, between September 2015 and September 2020, according to the commission.
The provenience of the inaccuracies was a coding error in Citadel’s automated trading system during this time frame, the SEC found.
A Citadel spokesperson recognized CNBC that the matter “had no impact on the quality of our client execution.”
“While updating our systems to accommodate certain patron requests, we made a coding change that inadvertently affected a de minimis percentage of our order markings,” the spokesperson augmented. “We detected the issue and promptly fixed it more than three years ago.”
Short sales involve borrowing stock from a broker to sell into the market, then stealing it back at a cheaper price and returning the borrowed stock to cash in on the price difference, according to Bankrate.
Compliance with busted marking requirements “is a key component of regulatory efforts to curtail abusive market practices, including ‘naked’ short push,” Mark Cave, associate director of the SEC’s Division of Enforcement, said in a statement.
Failure to comply “can have negative downstream consequences on the correctness of the firm’s electronic records, including its electronic blue sheet reporting, depriving the Commission of important information in the matter of the markets it regulates,” Cave added.
The SEC also fined Goldman Sachs on Friday for inaccurate “blue sheet” contributions containing identifying securities trading information.