Interactive Brokers Fined $5.5 Million for Naked Short Selling Violations
- Thread starter ajacobson
- Start date
a non paywalled article about this:
https://www.leaprate.com/financial-...lion-for-reg-sho-naked-short-sale-violations/
https://www.leaprate.com/financial-...lion-for-reg-sho-naked-short-sale-violations/
I have accidentally short-sell stocks on IB platform and the order went through. This is what I particularly hate about IB platform despite being happy on most counts. I wish they will stop customers' orders which are accidental short-sell. Most customers have no intention to short-sell.
Robert Morse
Sponsor
We have risk setting on Lightspeed Trader that can restrict short selling by request. Why don't you call and wait on the phone for 30 min at your favorite broker to find out if they also have that setting. We can also set max loss limits per day which is very popular with day traders.
BTW, the fine is for allowing locates and shorting of hard to borrow stocks, that they could not make good delivery of by settlement. This is a common violation for a clearing firm as FINRA has gotten very strict since Reg-Sho has been enacted. The size of the fine tells me that it has been a violation that has been frequent over time from improper supervision of their stock loan department.
Bob
doh, I just noticed my system is long IBKR while this news came out !
And yes, the system runs on IBKR. Irony
And yes, the system runs on IBKR. Irony
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doh, I just noticed my system is long IBKR while this news came out !
And yes, the system runs on IBKR. Irony
$5.5M fine is what like $500K to IBKR? (the IBKR publicly traded stock only owns a piece of the actual brokerage). As such, the impact on IBKR (the stock) is basically nothing. So maybe they fix their system and get a little less in commissions. Seems like an overreaction to me. That's not to comment on what I think of IBKR stock long term, just I think this little news dip is a massive over reaction.
Lee-, you're right, this isn't what's causing the dip. Most brokers down around 5% in premarket: https://seekingalpha.com/news/3384439-online-brokers-sink-premarket-jpmorgan-unveils-investing-app
Basically Thomas Peterffy. I've read their reports a couple times which explains it in detail, but this image I just found on their site pretty much highlights it:
Effectively IBG LLC is the broker that we all know. IBKR (the stock) is the "Public Stockholders" in the attached image. "Members of IBG Holdings LLC" is effectively Thomas Peterffy and a few associates. As you can see, the IBKR stock effectively only owns 17.8% of the brokerage itself by way of "Interactive Brokers Group, Inc", but the majority ownership and voting power are controlled through IBG Holdings LLC, which is not publicly traded.