SEC Charges Weiss Asset Management with Short Selling Violations

The Securities and Exchange Commission today announced that investment advisory firm Weiss Asset Management LP has agreed to pay approximately $6.9 million to settle charges that it violated the federal securities laws when it unlawfully purchased stock in seven public offerings after selling short those same stocks. The SEC’s order finds that, on seven occasions between December 2020 and February 2021, Weiss Asset Management violated Rule 105, which prohibits short selling an equity security during a restricted period (generally five business days before a covered public offering) and then purchasing the same security through the offering, absent an exception. The rule applies regardless of the trader’s intent and promotes offering prices that are set by natural forces of supply and demand rather than potentially manipulative activity.