SEC Charges Broker-Dealers With Illicitly Profiting in Partial Tender Offer

The Securities and Exchange Commission today announced settled charges against two registered broker-dealers, Bluefin Trading LLC and Critical Trading LLC, for violating the so-called “short tender rule” and enriching themselves at the expense of other participants in a partial tender offer. According to the SEC’s orders, as part of a 2016 partial tender offer for the common stock of Lockheed Martin Corp., Bluefin and Critical each independently tendered more Lockheed shares than their net long positions in that security in violation of the short tender rule. Because partial tender offers are for less than all of the outstanding shares of a security, if the tender offer is oversubscribed, the company accepts shares pro rata.