A probe showed deficiencies in Nordnet's internal guidelines, procedures, risk management and risk assessment as well as in its duty of care to its customers, the Financial Supervisory Authority said in a statement.
"The investigation shows that the bank, when offering the service, did not control that there were enough shares available before the bank's customers were allowed to short the shares," it said.
"Nordnet has offered an inaccurate service that risks introducing shortcomings and problems to the securities market."
Nordnet said in a separate statement its preliminary assessment was that the fine was too high and that it may appeal the decision. [FWN2XH00X]
The FSA said the violations had meant a considerable risk that customers were short selling shares without coverage, so-called naked short-selling, which is banned, and that Nordnet had been aware of the deficient procedures since 2018 without rectifying all of them.
($1 = 9.7933 Swedish crowns)
(Reporting by Anna Ringstrom; Editing by Simon Johnson)