Clarus Stock’s ‘Market-Making’ Dealer Avoids Short-Swing Trial

Clarus Corp. can’t attempt to recoup an alleged $57 million in short-swing profits from a dealer at trial because the trades fit an exemption for market-making activities, a federal court ruled.

HAP Trading LLC acted as a “market maker"—offering to buy or sell a security when presented with customer orders—in the over-the-counter market for Clarus securities, Judge John P. Cronan said. His decision March 14 for the US District Court for the Southern District of New York is one of very few on the scope of the exemption, according to the opinion.

HAP’s use of a national securities exchange to ...