short sale

In a statement, the SEC said Citadel Securities over a five-year period had incorrectly marked millions of orders, denoting short sales as long sales and vice versa.

The move, according to the bank's prime brokerage unit, was mainly led by short sales, meaning that hedge funds were speculating on a decline in energy stocks' prices.

Indeed, the bankers say, short sales have followed “relatively favorable earnings reports.”

“The S.E.C. has the enforcement capability to look at what people are doing by name in options, derivatives, short sales,” he told Bloomberg.

The banks' failure led to some traders initially being unable to cash in winning put options till brokerages made an exception to rules on banning short sales.