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Short Seller Whacked for $2 Million

WASHINGTON (CN) - A Chicago-area trader will pay $2 million to settle SEC charges of making $1.5 million by breaking the rules on short selling.

Gary S. Bell will disgorge $1.5 million, plus $336,094 in interest and pay a $250,000 penalty, the SEC said in announcing the settled complaint.

The SEC said Bell failed to locate and deliver the shares involved in short sales to broker-dealers and their customers.

"Because the stock being provided by Bell was not truly available for delivery to the broker-dealers or their short selling customers, Bell actually was effecting illegal 'naked' short sales," the SEC said in a statement. He thus earned profits with minimal risks and gained an advantage over legitimate players.

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