Investment advisory firm HITE Hedge Asset Management and its private fund clients agreed to pay more than $220,000 to settle allegations the firm violated a Securities and Exchange Commission (SEC) rule concerning short selling.

In May 2021, traders at Massachusetts-based HITE Hedge Asset Management sold Pioneer Natural Resources stock within five business days of a public offering for the stock—known as a restricted period—then repurchased the stock during the offering, the SEC alleged. Short selling during a restricted period is a violation of SEC Rule 105, which is designed to prevent market manipulation.

At the time, HITE didn’t have any formal written policies about Rule 105, according to the SEC’s complaint filed Friday in U.S District Court for the District of Massachusetts. Instead, traders were required to obtain written approval from the chief compliance officer before they participated in public offerings. The CCO erroneously gave traders permission to participate in the trades “because he mistakenly believed that Rule 105 did not apply to the offering,” according to the complaint.