The U.S. Securities and Exchange Commission (SEC) announced a decision on Contrarian Capital Management L, an investment advisory firm based in Greenwich, Connecticut..L.C.Filed settlement charges alleging that the company violated SEC rules by purchasing shares of two publicly available securities for an advisory client during a period when SEC rules prohibited short-selling the same stock for the advisory client。

The SEC order found that Contrarian violated Section 105 of Regulation M of the Securities Exchange Act, which prohibits short selling of shares during a restricted period (typically five business days prior to a secured public offering) and then purchasing the same securities in the offering, unless there are exceptions.。The rule applies regardless of the trader's intentions and is designed to prevent potentially manipulative short selling prior to the pricing of a secondary offering of secured securities。

The order also found that Contrarian was involved in two secured securities offerings in April and June 2020 and sold the same securities short during the corresponding restriction period, in violation of Rule 105.。

According to the order, each short sale is due to the exercise and transfer of call options sold by Contrarian on behalf of its customers prior to the restriction period.。The SEC's order states that Contrarian has taken remedial action, including amending its Section 105 policies and procedures.。

Contrarian does not admit or deny the findings in the SEC order, agrees to cease committing or causing a violation of Section 105, and pays 351,726.$86 fine, 29,600.$50 pre-trial interest and $140,000 civil penalty。