As part of a settlement with the Financial Industry Regulatory Authority (FINRA), ACS Execution Services LLC agreed to pay a fine of $250,000.

ACS provides execution services to broker-dealers and executes orders as agent, net trader, or riskless principal based on received instructions. When the company receives short sale orders from customers on a net basis, it executes short sale orders (or multiple orders) for the same security on exchanges or other execution venues and then buys the security as principal at different prices to meet the order's requirements.

In trading this way, two short sales occur: ACS accepts the short sale order from its broker-dealer customer and executes a short sale order for its own account.

From June 2017 to the present, ACS mistakenly believed that it could rely on its broker-dealer customers' positions to facilitate net trades when executing short sales for its own account. Therefore, ACS conducted at least 10 million short sales for its own account to facilitate net short sale orders without borrowing the securities, making a good faith arrangement to borrow the securities, or having a reasonable belief that the securities could be borrowed for delivery on the due date.

As a result, the defendant violated Section 203(b)(1) of Regulation SHO and FINRA Rule 2010.

During the same period, ACS also violated FINRA Rules 3110 and 2010 by failing to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the locate requirements of Rule 203.

In addition to the fine, the company also agreed to a censure.