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SEC settles with 2 broker/dealers over charges related to 'short tender rule'

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SEC settles with 2 broker/dealers over charges related to 'short tender rule'

The Securities and Exchange Commission settled charges against Bluefin Trading LLC and Critical Trading LLC for violating the so-called short tender rule.

According to the regulator, Bluefin Trading and Critical Trading each independently tendered more Lockheed Martin Corp. common shares than their net long positions in a 2016 partial tender offer for common shares of the aerospace company. The SEC said the partial tender offer was oversubscribed, and by tendering excess shares, the two broker/dealers caused Lockheed Martin to accept more shares from them and fewer shares from other participants.

The SEC said Bluefin Trading's actions produced $223,836 in unlawful profits, while Critical Trading's actions produced $149,224 in unlawful profits.

Bluefin Trading agreed to pay disgorgement and prejudgment interest of $253,638 and a penalty of $50,000. Critical Trading agreed to pay disgorgement and prejudgment interest of $169,092 and a penalty of $50,000. The two broker/dealers neither admitted nor denied the SEC's findings and agreed to be censured and to cease and desist from committing similar violations in the future.