In re PAN CAPITAL AB

 
 
 
 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 70409 / September 16, 2013 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-15492 
 
 
In the Matter of 
 
PAN CAPITAL AB,  
 
Respondent. 
 
 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER AND CIVIL 
PENALTY 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against Pan Capital AB (“Pan Capital” or 
“Respondent”).  
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings  
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
 proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.   
 
 
 
 
 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
Summary 
 
1. These proceedings arise out of violations of Rule 105 of Regulation M of the 
Exchange Act by Pan Capital, a Swedish-based investment firm.  Rule 105 prohibits buying an 
equity security made available through a public offering, conducted on a firm commitment basis, 
from an underwriter or broker or dealer participating in the offering after having sold short the 
same security during the restricted period as defined therein. 
 
 2. On four occasions, in May 2009, Pan Capital bought offered shares from an 
underwriter or broker or dealer participating in a follow-on public offering after having sold short 
the same security during the restricted period.  These violations collectively resulted in profits of 
$424,593.  
 
Respondent 
 
 3. Pan Capital AB is an international investment firm headquartered in Stockholm, 
Sweden.  The firm trades in foreign exchange markets, bonds, other interest-bearing instruments, 
and derivatives.  The firm was founded in 1998 and has additional offices in Hong Kong and 
Fort Lauderdale, Florida.   
 
Legal Framework 
 
4. Rule 105 makes it unlawful for a person to purchase equity securities from an 
underwriter, broker, or dealer participating in a public offering if that person sold short the 
security that is the subject of the offering during the restricted period defined in the rule, absent 
an exception.  17 C.F.R. § 242.105; see Short Selling in Connection with a Public Offering, Rel. 
No. 34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007).  The Rule 105 
restricted period is the shorter of the period:  (1) beginning five business days before the pricing 
of the offered securities and ending with such pricing; or (2) beginning with the initial filing of a 
registration statement or notification on Exchange Act Form 1-A or Form 1-E and ending with 
pricing.   
 
5. “The goal of Rule 105 is to promote offering prices that are based upon open 
market prices determined by supply and demand rather than artificial forces.”  Final Rule: Short 
Sales, Exchange Act Release No. 50103.  Rule 105 is prophylactic and prohibits the conduct 
irrespective of the short seller’s intent in effecting the short sale. 
  
 
                                                 
1
 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person 
or entity in this or any other proceeding. 
 

 3 
Pan Capital’s Violations of Rule 105 of Regulation M 
 
 6. On May 13, 2009, Pan Capital sold short 50,369 shares of MGM Resorts 
International (“MGM”) during the restricted period at an average price of $10.3436 per share.  On 
May 13, 2009, MGM announced the pricing of a follow-on offering of its common stock at $7.00 
per share.  Pan Capital received an allocation of 50,000 shares in that offering.  The difference 
between Pan Capital’s proceeds from the restricted period short sales of MGM shares and the price 
paid for the 50,000 shares received in the offering was $167,180.  Thus, Pan Capital’s participation 
in the MGM offering netted total profits of $167,180.  
 
 7.    On May 11, 2009, Pan Capital sold short 50,954 shares of U.S. Bancorp (“USB”) 
during the restricted period at a price of $19.4649 per share.  On May 12, 2009, USB announced 
the pricing of a follow-on offering of its common stock at $18.00 per share.  Pan Capital received 
an allocation of 10,000 shares in that offering.  The difference between Pan Capital’s proceeds 
from the restricted period short sales of USB shares and the price paid for the 10,000 shares 
received in the offering was $14,649.  Thus, Pan Capital’s participation in the USB offering netted 
total profits of $14,649. 
 
 8. On May 11, 2009, Pan Capital sold short 39,985 shares of BB&T Corp. (“BBT”) 
during the restricted period at a price of $25.1326 per share.  On May 12, 2009, BBT announced 
the pricing of a follow-on offering of its common stock at $20.00 per share.  Pan Capital received 
an allocation of 25,000 shares in that offering.  The difference between Pan Capital’s proceeds 
from the restricted period short sales of BBT shares and the price paid for the 25,000 shares 
received in the offering was $128,315.  Thus, Pan Capital’s participation in the BBT offering 
netted total profits of $128,315. 
 
 9. On May 12, 2009, Pan Capital sold short 170,981 shares of Ford Motor Co. (“F”) 
during the restricted period at an average price of $5.3744 per share.  On May 12, 2009, F 
announced the pricing of a follow-on offering of its common stock at $4.75 per share.  Pan Capital 
received an allocation of 250,000 shares in that offering.  The difference between Pan Capital’s 
proceeds from the restricted period short sales of F shares and the price paid for the 170,981 shares 
received in the offering was $106,760.54.  Respondent also improperly obtained a benefit of 
$7,688.55 by purchasing the remaining 79,019 shares at a discount from F’s market price.  Thus, 
Pan Capital’s participation in the F offering netted total profits of $114,449.09.  
 
  10. In total, Pan Capital’s violations of Rule 105 resulted in profits of $424,593. 
 
Violations 
 
 11. As a result of the conduct described above, Pan Capital violated Rule 105 of 
Regulation M under the Exchange Act.  
 
 
 
 

 4 
Pan Capital Remedial Efforts 
12. In determining to accept the Offer, the Commission considered remedial 
acts promptly undertaken by Respondent and cooperation afforded to Commission staff. 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent Pan Capital’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent Pan Capital cease and 
desist from committing or causing any violations and any future violations of Rule 105 of 
Regulation M of the Exchange Act;   
 
 B. Pan Capital shall within fourteen (14) days of the entry of this Order, pay 
disgorgement of $424,593, prejudgment interest of $17,249.80, and a civil money penalty in the 
amount of $220,655 (for a total of $662,497.80) to the United States Treasury.  If timely payment 
is not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  Payments must 
be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, which will 
provide detailed ACH transfer/Fedwire instructions upon request;
2
 
(2) Respondent may make direct payment from a bank account via Pay.gov through the 
SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
(3) Respondent may pay by certified check, bank cashier’s check, or United States postal 
money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to: 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK  73169 
 
  
 
 
 
 
 
 
                                                 
2
  The minimum threshold for transmission of payment electronically is $1,000,000.  For amounts below the 
threshold, respondents must make payments pursuant to options (2) or (3) above. 

 5 
 
 
 
Payments by check or money order must be accompanied by a cover letter identifying Pan Capital 
as  a  Respondent  in  these  proceedings,  and  the  file  number  of  these  proceedings;  a  copy  of  the 
cover  letter  and  check or  money  order  must  be  sent  to  Gerald  W.  Hodgkins,  Associate  Director, 
Division of Enforcement, Securities  and Exchange Commission, 100 F Street, N.E., Washington, 
DC  20549.  
 
 By the Commission. 
 
 
 
       Elizabeth M. Murphy 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 70409 / September 16, 2013 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-15492 

 

 

In the Matter of 

 

PAN CAPITAL AB,  

 

Respondent. 

 

 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER AND CIVIL 

PENALTY 

  

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against Pan Capital AB (“Pan Capital” or 

“Respondent”).  

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings  

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

 proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order and Civil Penalty (“Order”), as set forth below.   

 

 

 

 

 



 2 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

Summary 

 

1. These proceedings arise out of violations of Rule 105 of Regulation M of the 

Exchange Act by Pan Capital, a Swedish-based investment firm.  Rule 105 prohibits buying an 

equity security made available through a public offering, conducted on a firm commitment basis, 

from an underwriter or broker or dealer participating in the offering after having sold short the 

same security during the restricted period as defined therein. 

 

 2. On four occasions, in May 2009, Pan Capital bought offered shares from an 

underwriter or broker or dealer participating in a follow-on public offering after having sold short 

the same security during the restricted period.  These violations collectively resulted in profits of 

$424,593.  

 

Respondent 

 

 3. Pan Capital AB is an international investment firm headquartered in Stockholm, 

Sweden.  The firm trades in foreign exchange markets, bonds, other interest-bearing instruments, 

and derivatives.  The firm was founded in 1998 and has additional offices in Hong Kong and 

Fort Lauderdale, Florida.   

 

Legal Framework 

 

4. Rule 105 makes it unlawful for a person to purchase equity securities from an 

underwriter, broker, or dealer participating in a public offering if that person sold short the 

security that is the subject of the offering during the restricted period defined in the rule, absent 

an exception.  17 C.F.R. § 242.105; see Short Selling in Connection with a Public Offering, Rel. 

No. 34-56206, 72 Fed. Reg. 45094 (Aug. 10, 2007) (effective Oct. 9, 2007).  The Rule 105 

restricted period is the shorter of the period:  (1) beginning five business days before the pricing 

of the offered securities and ending with such pricing; or (2) beginning with the initial filing of a 

registration statement or notification on Exchange Act Form 1-A or Form 1-E and ending with 

pricing.   

 

5. “The goal of Rule 105 is to promote offering prices that are based upon open 

market prices determined by supply and demand rather than artificial forces.”  Final Rule: Short 

Sales, Exchange Act Release No. 50103.  Rule 105 is prophylactic and prohibits the conduct 

irrespective of the short seller’s intent in effecting the short sale. 

  

 

                                                 
1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other person 

or entity in this or any other proceeding. 

 



 3 

Pan Capital’s Violations of Rule 105 of Regulation M 

 

 6. On May 13, 2009, Pan Capital sold short 50,369 shares of MGM Resorts 

International (“MGM”) during the restricted period at an average price of $10.3436 per share.  On 

May 13, 2009, MGM announced the pricing of a follow-on offering of its common stock at $7.00 

per share.  Pan Capital received an allocation of 50,000 shares in that offering.  The difference 

between Pan Capital’s proceeds from the restricted period short sales of MGM shares and the price 

paid for the 50,000 shares received in the offering was $167,180.  Thus, Pan Capital’s participation 

in the MGM offering netted total profits of $167,180.  

 

 7.    On May 11, 2009, Pan Capital sold short 50,954 shares of U.S. Bancorp (“USB”) 

during the restricted period at a price of $19.4649 per share.  On May 12, 2009, USB announced 

the pricing of a follow-on offering of its common stock at $18.00 per share.  Pan Capital received 

an allocation of 10,000 shares in that offering.  The difference between Pan Capital’s proceeds 

from the restricted period short sales of USB shares and the price paid for the 10,000 shares 

received in the offering was $14,649.  Thus, Pan Capital’s participation in the USB offering netted 

total profits of $14,649. 

 

 8. On May 11, 2009, Pan Capital sold short 39,985 shares of BB&T Corp. (“BBT”) 

during the restricted period at a price of $25.1326 per share.  On May 12, 2009, BBT announced 

the pricing of a follow-on offering of its common stock at $20.00 per share.  Pan Capital received 

an allocation of 25,000 shares in that offering.  The difference between Pan Capital’s proceeds 

from the restricted period short sales of BBT shares and the price paid for the 25,000 shares 

received in the offering was $128,315.  Thus, Pan Capital’s participation in the BBT offering 

netted total profits of $128,315. 

 

 9. On May 12, 2009, Pan Capital sold short 170,981 shares of Ford Motor Co. (“F”) 

during the restricted period at an average price of $5.3744 per share.  On May 12, 2009, F 

announced the pricing of a follow-on offering of its common stock at $4.75 per share.  Pan Capital 

received an allocation of 250,000 shares in that offering.  The difference between Pan Capital’s 

proceeds from the restricted period short sales of F shares and the price paid for the 170,981 shares 

received in the offering was $106,760.54.  Respondent also improperly obtained a benefit of 

$7,688.55 by purchasing the remaining 79,019 shares at a discount from F’s market price.  Thus, 

Pan Capital’s participation in the F offering netted total profits of $114,449.09.  

 

  10. In total, Pan Capital’s violations of Rule 105 resulted in profits of $424,593. 

 

Violations 

 

 11. As a result of the conduct described above, Pan Capital violated Rule 105 of 

Regulation M under the Exchange Act.  

 

 

 

 



 4 

Pan Capital Remedial Efforts 

12. In determining to accept the Offer, the Commission considered remedial 

acts promptly undertaken by Respondent and cooperation afforded to Commission staff. 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent Pan Capital’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, Respondent Pan Capital cease and 

desist from committing or causing any violations and any future violations of Rule 105 of 

Regulation M of the Exchange Act;   

 

 B. Pan Capital shall within fourteen (14) days of the entry of this Order, pay 

disgorgement of $424,593, prejudgment interest of $17,249.80, and a civil money penalty in the 

amount of $220,655 (for a total of $662,497.80) to the United States Treasury.  If timely payment 

is not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  Payments must 

be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request;2 

(2) Respondent may make direct payment from a bank account via Pay.gov through the 

SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

(3) Respondent may pay by certified check, bank cashier’s check, or United States postal 

money order, made payable to the Securities and Exchange Commission and hand-

delivered or mailed to: 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK  73169 

 

  

 

 

 

 

 

 

                                                 
2  The minimum threshold for transmission of payment electronically is $1,000,000.  For amounts below the 

threshold, respondents must make payments pursuant to options (2) or (3) above. 



 5 

 

 

 

Payments by check or money order must be accompanied by a cover letter identifying Pan Capital 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Gerald W. Hodgkins, Associate Director, 

Division of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, 

DC  20549.  

 

 By the Commission. 

 

 

 

       Elizabeth M. Murphy 

       Secretary