The U.S. Securities and Exchange Commission charged four former officials at a Penson Worldwide Inc. unit with violations of a post-financial crisis rule on securities lending that was designed to help markets function by ensuring that trades are completed, Reuters reported yesterday. Rule 204 of Regulation SHO was adopted by the SEC in July 2009 to curb abuses in "naked" short sales, where investors sell shares short without first borrowing those shares or making sure they can be borrowed. An inability to deliver such shares in a timely manner is called a "fail." According to the SEC, Thomas Delaney, once chief compliance officer at Penson Financial Services, knew the now-bankrupt clearing services firm's procedures for selling customer margin securities were causing rule violations, yet affirmatively assisted the violations and concealed them from regulators.
