SEC Charges Canadian Investment Adviser with Violating Trading Rule

ADMINISTRATIVE PROCEEDING
File No. 3-21783

October 19, 2023 - The Securities and Exchange Commission today announced settled charges against Canada-based Anson Advisors Inc. ("AAI") for violating an SEC trading rule when it purchased stock in three public offerings for private fund clients after selling short the same stock for private fund clients, during a time period when the SEC rule prohibited those purchases.

The SEC's order finds that AAI violated Rule 105 of Regulation M under the Securities Exchange Act of 1934 ("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 in the offering, absent an exception. The rule applies regardless of the trader's intent and is designed to prevent potentially manipulative short selling before the pricing of covered offerings. The SEC's order finds that AAI violated Rule 105 by participating in three follow-on offerings occurring in December 2019, June 2020, and April 2021, respectively, after it had engaged in short sales of the same securities during the restricted period, and that AAI's violations stemmed from an incorrect understanding of how to comply with an exception to Rule 105. According to the SEC's order, AAI has since undertaken remedial steps, including revising its Rule 105 policies and procedures.

Without admitting or denying the findings in the SEC's order, AAI agreed to cease and desist from committing or causing violations of Rule 105, and to pay disgorgement of $2,469,109.11, prejudgment interest of $261,285.20, and a civil penalty of $600,000.

The SEC's investigation was conducted by Rob Boudreau, Ty Martinez, and Matthew Gulde under the supervision of Samantha Martin, B. David Fraser, and Eric Werner of the Fort Worth Regional Office, with assistance from Wendy Kong of the Office of Investigative and Market Analytics.