Scotia Capital (USA) Inc.

Scotia Capital was fined $300,000 for overreporting its short interest positions.

The findings stated that the firm erroneously included non-reportable short positions reflected in omnibus accounts in the firm’s short interest reports.

The short positions in these accounts were not reportable because they did not result from “short sales” as defined in Rule 200(a) of Regulation SHO of the Exchange Act and were not transactions that were marked long due to the firm’s or the customer’s net long position at the time of the transaction.

The findings also stated that the firm failed to have a reasonably designed supervisory system for accurate short interest reports. The firm’s supervisory system did not include a process to determine whether its short interest report included non-reportable short positions and did not have a reasonable reconciliation process to identify potential inaccurate reporting.

The firm has since implemented new processes to its short interest reporting and supervision to remediate these issues.