StockCross Financial Services, Inc., agreed to pay a fine of US $800,000 to resolve allegations by the Financial Industry Regulatory Authority that it violated the Securities and Exchange Commission’s Regulation SHO from November 4, 2009, through May 31, 2013. Among other things, Reg SHO requires a clearing participant like StockCross to deliver relevant securities to a registered clearing agency for clearance and settlement on a short sale in any stock by its settlement date. If the relevant securities are not available, the participant must affirmatively close out the fail by no later than the beginning of regular trading hours following the settlement date. It must do so by borrowing or purchasing securities of a like kind and quantity. A participant may not simply offset failed to deliver amounts of a security against like securities the participant ordinarily receives or will receive during the requisite close-out period. Among other violations, FINRA charged StockCross with not executing affirmative buy-in transactions, as required, during the relevant time. According to FINRA, the firm looked at ordinary buy activity during requisite close-out periods, and counted such buy activity against the firm’s close-out obligation. It did not affirmatively purchase 100 percent of failed amounts. In addition, FINRA alleged that, during the relevant time, StockCross did not have appropriate Reg SHO supervisory procedures. In June 2015, Merrill Lynch agreed to pay US $11 million to the Securities and Exchange Commission to resolve alleged Reg SHO violations. (Click here for details in the article “Merrill Lynch Agrees to US $11 Million Payment to Resolve SEC Short Sale Charges” in the June 7, 2015 edition of Bridging the Week.)