The Securities and Exchange Commission on Thursday announced nearly $2.4 million in penalties in relation to actions brought against three hedge fund advisers, Galleon Management, L.P., Oaktree Capital Management, LLC and DB Investment Managers, Inc., for violations of Rule 105 of Regulation M.

Rule 105 is an anti-manipulation rule, which prohibits covering a short sale with securities obtained in a follow-on offering if the short sale occurred within five business days before the pricing of that offering. Such short sales can play a major role in decreasing a follow-on offering's share price, and can ultimately cut an issuer's proceeds from the deal by millions of dollars. 

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