The SEC says the two traders have agreed to settle the charges without admitting or denying guilt.
The agency says New York-based Stephen Hazan and Hazan Capital Management LLC have agreed to pay a penalty of $3 million to settle the charges, while Chicago-based TJM Proprietary Trading LLC agreed to a penalty of $541,000.
The two firms were charged with circumventing a rule that requires brokers to promptly produce shares in ?naked? short-selling transactions.
?Naked? short sales involve bets against a company's share price by investors who don't own the shares at the time of the sale.